MANILA —Overseas Filipino workers (OFWs) are emerging as the local property market’s saving grace as a high interest rate environment continues to dampen appetite for home loans.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed bank loans taken out to buy new homes declined 1.8 percent year-on-year nationwide in the third quarter, with the contraction more pronounced in Metro Manila where home loans collapsed 11.9 percent.
Home loans sagged as borrowing costs rose after painfully high inflation prompted the BSP to aggressively hike its benchmark rate, which banks typically use as a guide when charging interest on their loan products.
The lower loan availments translated to slower increase in home prices. Figures showed costs of shelter nationwide jumped 12.9 percent year-on-year in the third quarter, softer compared to 14.1 percent annual growth rate recorded in the preceding three months.
While high interest rates would remain a big concern, Joey Bondoc, associate director at Colliers Philippines, a property consultancy, believed that the local real estate market would continue to get support from OFWs who, historically, are big homebuyers.
That said, Bondoc explained that apart from changes in borrowing rates, the sector should focus more on global developments that may trigger a massive repatriation of Filipino expats.
“Investor sentiment is sensitive to interest rate spikes that’s why we are seeing slower take up for preselling condominium units in Metro Manila,” he said in an interview.
“Aside from interest rate movements, we also need to monitor possible global economic slowdown and geopolitical issues as these may also temper OFW remittance inflows and hence result in sluggish take up of residential units across the Philippines,” he added.
According to Bondoc, demand for new homes is usually weak every third quarter of each year and “this tempered take up may be the reason behind the slower pace of price increase.”
“Let’s wait for fourth quarter data to see if there will be some recovery. OFW remittances as well as local investor appetite usually pick up every last quarter of each year,” he said. —Ian Nicolas P. Cigaral