“BSP Deputy Governor Diwa Guinigundo earlier said authorities have been closely monitoring the real estate sector through the prices as well as the exposure of banks. “
The Residential Real Estate Price Index (RREPI) climbed 11.3 percent to 122.8 in the second quarter from the 110.3 recorded in the same quarter last year.
This was faster than the revised 9.4 percent increase booked in the first quarter when the RREPI stood at 115.9 against the 111 registered in the first quarter last year.
The data showed single-detached housing units booked the highest growth in prices at 18.6 percent followed by townhouses with 14.7 percent and duplex units with 0.6 percent. The prices of condominium units were almost unchanged.
BSP Deputy Governor Diwa Guinigundo earlier said authorities have been closely monitoring the real estate sector through the prices as well as the exposure of banks.
“We are aware of the potential risk that may result from all our exposure to the real estate sector. The real estate sector is viewed as an important concern in the BSP’s conduct of monetary policy and financial supervision because of the volatility in asset prices which could be brought about by undue speculation of bubbles,” he said.
Guinigundo explained the RREPI that is based on actual banks’ approved housing loans serves as a valuable tool in assessing the change in prices in real estate and credit market conditions in the country.
About 72 percent of the total real estate loans extended by banks were used to finance the purchase of new housing units. About half of the loans were used to buy single detached housing units followed by condominium units with 41.2 percent and townhouses with 8.4 percent.
The RREPI in the National Capital Region (NCR) slipped 2.7 percent to 117.8 in the second quarter from the revised 114.7 in the same quarter last year. This was way below the 10 percent growth in the first quarter when the index reached 116.5 from 115.6.
On the other hand, the RREPI in areas outside NCR jumped to 18.4 percent to 125.7 from the revised 106.2. This was faster than the revised nine percent growth in the first quarter when the index in the provinces climbed to 115.5 from 107.
Guinigundo said the BSP continues to expand the monitoring of the real estate exposure of banks by including past or debt securities of holding companies as well as loans extended for socialized and low cost housing.
“We now have a more comprehensive computation of exposure to the real estate sector. So we would know in advance if there is indeed there is some emerging asset bubble in the real estate industry,” he said.
Latest data from the central bank showed the real estate exposure of banks and trust entities stood at 20.76 percent in the second quarter from 20.79 percent in the first quarter.
Loans extended amounted to P1.39 trillion while investments in the real estate sector reached P233.33 billion in end-June this year.
A stress test exercise undertaken by universal and commercial banks on real estate exposure and other real estate property in September last year showed the industry could absorb shocks.
“We believe that this growth is based on a constructive demand-supply dynamics that have solid structural underpins. Moreover, our latest assessment in the banking system show that they are resilient and they can stand potential shocks on the housing sector,” Guinigundo said.
BSP Governor Amando Tetangco Jr. reiterated there is no overheating in the country’s property market amid the strong demand for housing from the young and economically active population.