21 Jun New Report Highlights Issue of Housing Affordability in the Philippines
Leading real estate website unveils results of its annual research
The Philippines’ housing backlog has emerged as one of the most pressing social and economic concerns in the country in recent years. A recent report showed that “at least 2,600 homes will have to be built every day over the next six years” to tackle the 5.7 million unit backlog before the end of this presidential term.
According to the Lamudi Real Estate Market Report 2017, the main issue facing Filipinos is the lack of low cost and social housing aimed at those who cannot afford the high prices that properties in the Philippines is commanding these days.
“As the population increases in size, the cost of living increases, and incomes don’t increase with the rising expenditures, [and] finding an affordable home is becoming a great challenge.”
The situation seems insurmountable at times, but the government has been coming up with a variety of suggestions in an attempt to help quell the backlog. These suggestions include potentially providing developers with tax breaks that may entice them to building large social housing projects. If the government can attract developers with schemes such as Income Tax Holidays, it is likely that developers will be more likely to take on projects, which are outside of their usual sphere.
In addition to the housing backlog, many prospective homebuyers are facing financial difficulty such as having access housing loans. Mortgages are currently hard for the average local wage earner to access in the country.
What more could be done?
In an interview recently with Lamudi, KMC MAG Managing Director Michael McCullough said that there are a lot of solutions [for the housing backlog] that do not cost taxpayers any money. “There’s a ton of government land in Metro Manila that you can rent to developers or even for free…It’s not that hard to do. I believe that the current president has probably got the will and strength to push something like that through,” said Mr. McCullough.
According to Mr. McCullough, sending people hundred of miles out of Metro Manila is not going to work because the jobs are here [in Metro Manila]. “We need people to live close to where they work. And then you don’t have to build infrastructure because if you want to build a subway it’s going to cost us $30 billion and we can’t afford that. Just build an affordable housing in and around the [central business districts] and traffic is solved.”
For his part, David Leechiu, CEO of Leechiu Property Consultants recommends creating more jobs. “[T]he biggest problem with the low-cost housing market is that we build all these houses and somebody has to pay for them. The buyers cannot afford to pay, they always default so the government steps in and covers that balance and collects from the people.”
“The solution there is the more jobs you create, the affordable houses become. The good news is that unemployment rate is the lowest today it’s ever been. We are quite optimistic that trend will continue,” said Mr. Leechiu.
To read more the Lamudi Real Estate Market Report 2017, visit this page.