Construction efforts accelerate to address the Philippines' housing backlog

Insufficient levels of affordable housing across urban centres is one of the more complex issues facing the government, with the challenge compounded by the pace of urbanisation currently under way.

Housing in the Philippines is categorised into five broad groups based on affordability: social housing, with a sales price of up to P450,000 ($8890); economic housing that sells between P450,000 ($8890) and P1.7m ($33,600); low-cost housing that ranges P1.7m ($33,600) to P3m ($59,300); mid-cost housing that sells for P3m ($59,300) to P4m ($79,000); and open-market or high-cost housing priced over P4m ($79,000).

According to the University of Asia and the Pacific (UA&P), the excess supply of high-end and mid-cost homes increased from 474,414 units in 2012 to 561,089 units in 2015, while the backlog in housing categories below P3m ($59,300) amounted to 6.7m units in 2015. The research also found that the projected housing backlog for 2016 to 2030 is estimated to be 5.6m units, of which 1.4m is in the social housing category, 2.5m is economic housing and 611,813 are low-cost units, alongside 1.1m homes for those who cannot afford to get on the property ladder at all.

Addressing Need

The issue of urban slums is worsening on the back of limited affordable units and chronic city congestion. According to the World Bank, there are around 17m urban slum dwellers in the Philippines, with families nationwide living in stilt houses and other types of makeshift dwellings. The Philippines is only behind China (191.1m) and Indonesia (29.2m) in terms of urban slum dwellers in the East Asia-Pacific region, though both of their populations are significantly larger. This represents another hurdle in tackling housing, as health and safety are prime concerns.

To aid housing efforts, authorities created the Philippine Housing Industry Roadmap (PHIR) 2012-30. With the help of shelter agencies, local government units, and subdivision, condominium and social housing developers, the PHIR aims to build 2m homes between 2017 and 2022 and another 7m in the 2023-30 period. However, the PHIR estimates that 12.5m homes are needed by 2030, leaving a backlog of 3.5m. This projection is on the low side, with the UA&P forecast around 2m higher.

In February 2018 the House of Representatives approved the final reading of a bill to create a Department of Human Settlements and Urban Development that would amalgamate the Housing and Urban Development Coordinating Council and the Housing and Land Use Regulatory Board under one umbrella. Among other things, the new office will be tasked with developing a national strategy for addressing the lack of adequate and affordable housing. The bill was listed as a priority for Congress by President Rodrigo Duterte.

Market Moves

While home ownership remains out of reach for many low- to middle-income Filipinos, a growing upper-middle class and rising remittances are expanding the market and creating business opportunities for developers and property agencies. Equipping potential buyers with the information needed to make purchasing decisions has become a focus of private players intent on tapping into the growing market.

The second edition of the Affordable Housing Fair in summer 2018 run by property listing site Lamudi Philippines is one such example. At the inaugural event in July 2017, which was attended by over 5000 perspective homebuyers, seminars were offered by a number of private players and government agencies. The Home Development Fund, or Pag-IBIG, offered information on financing, while the Social Security System spoke about investing in foreclosed properties.

Efforts to match buyers with available properties will complement efforts to expand supply. However, while the Duterte administration is making strides with its Build, Build, Build scheme, there is still considerable ground to make up in terms of providing affordable housing. As such, the challenge of meeting housing demand will be difficult to achieve, at least for fast-growing cities, under the current housing plans.