04/09/2024
BUSINESS: Leuterio: Higher price ceilings to improve quality of housing
By Ehda M. Dagooc
The quality of affordable housing in the Philippines is expected to improve following the government’s decision to raise the price ceilings for low and medium-cost housing packages.
According to licensed broker and founder of Filipino Homes Anthony Gerard O. Leuterio, the move enables property developers to construct high-quality housing units while also encouraging more developers to build additional units within these categories.
The new ceiling for low-cost housing is now P4.9 million while for medium-cost housing is P6.6 million, according to the Joint Memorandum Circular 2024-001 by the National Economic and Development Authority (Neda) and the Department of Human Settlements and Urban Development (DHSUD) to address the need to align housing costs with current economic conditions.
“It acknowledges the inflationary pressures and construction cost increases, helping developers to maintain quality while staying within the affordable housing segment,” said Leuterio adding this initiative potentially broadens the market for affordable housing, allowing more families to own homes in a price range that better reflects the current economic conditions.
“This move could stimulate the housing market, drive economic growth, and improve living conditions for many citizens by making quality housing more attainable,” addedLeuterio.
At present, the Philippines is currently facing a rapidly growing housing backlog, with a deficit of 6.5 million units.
Recently, NEDA and DHSUD have approved new guarantee ceilings for low-medium-cost housing packages in response to requests from the Subdivision and Housing Developers Association (SHDA).
NEDA and DHSHUD formalized the adjustment through the Joint Memorandum Circular No. 2024-001.
This move addresses the need to align housing costs with current economic conditions.
“The adjustment was deemed timely and necessary as it accounts for the country's prevailing economic conditions,” said SHDA chairman Leonardo Dayao Jr.
The recommendation, based on NEDA's price inflation analysis, led to the establishment of new guarantee ceilings, setting them at P4.9 million for low-cost housing and P6.6 million for medium-cost housing.
“This adjustment is a significant step towards making housing more accessible to Filipino families," added Dayao, acknowledging NEDA and DHSUD serious stance in heeding the housing sector’s plea.
The Joint Memorandum Circular No. 2024-001 specifies the following adjustments: Low-Cost Housing ceiling adjusted to P4.9 million, and Medium-Cost Housing ceiling adjusted to P6.6 million. Rising material costs, labor expenses, and overall inflation trends were key factors considered in these adjustments.
NEDA's economic analysis highlighted that these new ceilings would provide a more realistic framework for housing developers and make it easier for potential homeowners to purchase properties within their budget.
Pursuant to their mandate to jointly determine price ceilings for socialized, low-cost, medium-cost, and open housing every two years, the DHSUD and NEDA have set the ceilings as follows: Level 1-A (Socialized) - P300,000 and below; Level 1-B - Above P300,000 to PHP 500,000; Level 2 - Above P500,000 to P1.25 million; Level 3 - Above P1.25 million to P3.0 million; Medium Cost - Above P3.0 million to P4.0 million; and Open Market - Above P4.0 million. Since its revision in 2007, the price ceilings for socialized and economic housing have been revised several times through various resolutions due to the steadily increasing costs of raw land, development, construction materials, and labor.
The most recent revisions before this adjustment were the May 11, 2022, “DHSUD-NEDA Joint Determination for Economic Price Ceiling,” setting the economic guarantee ceiling to PHP 2.5 million, and Joint Memorandum Circular No. 03, Series of 2023 “Adjusting the Price Ceiling for Socialized Subdivision and Condominium Projects” from P580,000 to P850,000.
In November 2023, based on the current Consumer Price Index (CPI), Residential Real Estate Price Index (REPI) of the Bangko Sentral ng Pilipinas (BSP) and the minimum wage as parameters for the adjustments, PHILGUARANTEE re-submitted an adjusted proposal of P4.99 million and P6.65 million for low-cost and medium-cost housing, respectively.
