Residential Real Estate Prices Decline YOY in Q2 2021
As posted by Bangko Sentral ng Pilipinas
Nationwide residential property prices down 9.4% YoY, but up 4.8% QoQ in Q2 2021
The residential real estate prices of various types of new housing units in the Philippines declined for two consecutive quarters, based on the year-on-year (YoY) growth of the Residential Real Estate Price Index (RREPI). In Q2 2021, the nationwide house prices contracted by 9.4 percent YoY (from -4.2 percent in Q1 2021) due to the continued effects of the pandemic on the residential property demand. High base effects may also have contributed to the drop in prices given the registered peak of the index in Q2 2020.1 In contrast, property prices increased by 4.8 percent quarter-on-quarter (QoQ) (Figure 1).2
By area, NCR residential property prices slump YoY, but NCR and AONCR rise QoQ
The YoY contraction in the nationwide residential property prices was driven mainly by the downtrend of property prices in the NCR, which fell by 18.3 percent relative to Q2 2020, marking four consecutive quarters of decline since Q3 2020 (Figure 1). The decline emanated from the negative price changes of single detached, condominium and townhouse units in the NCR. In the case of duplex housing, no bank loans were granted and reported to the BSP in Q2 2021.3
Likewise, property prices in AONCR decreased marginally by 0.6 percent YoY as the drop in the prices of single detached/attached houses more than offset the growth in the prices of townhouses, duplexes, and condominium units. On a QoQ basis, house prices grew in NCR (by 3.4%) and AONCR (by 5.1%), following the national trend.
By type of housing units, YoY drop is largely driven by the fall in prices of condominium units and single detached houses
The 9.4 percent YoY drop in the nationwide RREPI was primarily driven by the fall in prices of condominium units and single detached/attached houses, at 14.3 percent and 7.4 percent, respectively, in Q2 2021. This is the fourth consecutive quarter that prices of condominium units declined, owing mainly to the lackluster demand for condominium units in NCR. In contrast, prices of duplexes and townhouses increased by 28.9 percent and 15.1 percent, respectively (Figure 2).
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About the report
The RREPI is a measure of the average change in the prices of various types of housing units, i.e., single detached/attached houses, duplexes, townhouses, and condominium units, based on banks’ data on actual mortgage loans granted to acquire new housing units only. It is a chain-linked index, which is computed using the average appraised value per square meter, weighted by the share of floor area of each type of housing unit to the total floor area of all housing units. The RREPI is used as an indicator for assessing the real estate and credit market conditions in the country. The BSP has been releasing the report since Q1 2016.
Data for the RREPI are obtained through BSP Circular No. 892 dated 16 November 2015, which requires all universal/ commercial banks (UBs/KBs) and thrift banks (TBs) in the Philippines to submit to the BSP a quarterly report on all RRELs granted.