HOUSING GAINS AND PAINS

The Philippine Star
10/26/09

The housing backlog in the Philippine continues to be overwhelming. As of last count, there are about 3.75 million homes that still need to be constructed. We’re talking here of one Filipino family out of four that is either renting, or sharing with family or relative, or simply squatting.

The good news, however, is that construction of new houses on all market segments – low income, medium, high-end and even luxury – seems to be on the upswing. Developers have never been so busy building and selling housing units.

All this is happening despite the still generally cautious view on investing brought about by the recent global crisis. In fact, insider word is that housing developers who had decided to delay construction plans last year because of the uncertainties are now doubling efforts to make up for lost time.

Not that you could blame these developers. Last year, at a time when the joblessness figures in the U.S. were reaching record levels, there were so many scare scenarios about Filipino overseas workers being laid off and returning home because of the demand slump for manufactured goods.

Even in Saudi Arabia where 1.27 million Filipinos are reportedly employed, many construction projects were reportedly being put on hold. In fact, in Taiwanese factories manufacturing electronic chips, many of our countrymen had to actually prematurely end their contracts.

But many of these fears did not actually materialize, thanks to the massive infusion of funds by developed countries’ governments in their economies which were intended to stave off a collapse of the world’s financial system.

Extra income

And so, we are actually seeing the continued increase in the numbers of migrant Filipino workers and the sustained rise in the repatriation of foreign earnings. Even as the year is drawing to an end, remittance figures are already up by 3.7 percent. The central bank is bullish that full year totals will be higher by 10 percent compared to the previous year.

The official amount that is being sent back to the country by our hardworking countrymen now averages $1.4 billion a month. While the bulk of this amount still mostly covers for everyday expenses, there is a growing portion that is being paid for amortizations of new homes or the upgrading of existing dwellings.

For majority, the extra money comes from having been an OFW for decades. Many of their children have grown up and have joined the economic mainstream, and most of them are financially independent from their parents.

There are new migrant workers, though, who are employed as professionals and therefore receive higher wages. Nurses and other medical industry workers employed in developed countries, in particular, are readily able to afford the middle- to high-end housing units that are being built locally.

Low interest rates

The other, and equally important, reason for the vibrancy being felt in the housing industry is the continued ease of access of low interest rate loans to buy a lot and build a house.

The global economic crunch has pulled down overall loan interest rates of many developed countries’ central banks to near zero. As a result, our central bank has also had to reduce its overnight lending rates.

One of the government agencies that has benefited from and translated this to benefit the general public is the Home Development Mutual Fund or Pag-ibig Fund. Pag-ibig Fund housing loans are down to a very affordable six percent per year for up to P400,000 and payable over a 30-year period.

While the loan packages have become more affordable to fund members, the bureaucracy in availing of loans has been drastically reduced. As Vice President Noli de Castro, who is concurrent housing czar, says in the Fund’s advertisement, “Ano pa ang hinihintay mo, kabayan.”

Over the past three years, the Fund has introduced more reforms in its lending guidelines than at any other period in its 28-year history, according to Kabayan. Housing loan interest rates were adjusted five times from 2006 to April 2009, resulting in an environment of low interest rates.

The biggest cuts were in the lower loan packages that targeted ordinary wage earners. Loan repayment periods were adjusted to a maximum of 30 years for all packages.

Fund members may borrow up to P3 million, with interest rates ranging from six percent to 11.5 percent. This has strongly helped to make home ownership more viable over rental housing since monthly amortizations are lower than monthly rental rates.

Informal settlers

Such genuine reforms in the provision of housing loans are being felt mostly by middle- to upper-income wage earners. It is the low-incom workers that buck the generous government housing initiatives, and where more attention is needed.

While some minimum wage earners do buy house and lots even if these are found at the far fringes of Metro Manila or urban centers of nearby provinces, a large number still insist on living within the metropolis center as informal settlers. Their insistence to stay within the metropolis center made many of them unfortunate victims of typhoon “Ondoy.”

More than half a million households of informal settlers in Metro Manila representing 21 percent of the total 2.6 million household population need to be encouraged to relocate outside the metropolis.

Perhaps some system of incentive or an effective job-switching program may be in order to do the trick. It would do minimum or below-minimum wage earners well to move to the countryside where the cost of living is lower, and where the quality of life of their family members could be much better.

2009 Philippine Collegiate Championship update

Congratulations to San Sebastian College-Recoletos Golden Stags for regaining the NCAA crown from the three-peat champion San Beda Red Lions. With this feat, the Golden Stags get the top seeding in Group Y of the 2009 Philippine College Championship “Sweet 16” Finals. Ateneo de Manila Blue Eagles, UAAP champion, is the top team in Group X.

The other earlier qualifiers to the “Sweet 16” are San Beda Red Lions, JRU Heavy Bombers and Letran Knights from the NCAA and UE Red Warriors, FEU Tamaraws and UST Growling Tigers from UAAP. Eight seats are still vacant awaiting the results of the CESAFI championship series and the zonal qualifying games to be held at Cebu, Bacolod, Naga and Metro Manila.

The slot reserved for the CESAFI champion in the “Sweet 16” Finals is still up for grabs between University of Visayas Green Lancers and the University of Cebu Webmasters. UV is leading the series 1-0 after beating UC in game one, 76 to 71.

De La Salle Green Archers, 2008 Philippine Collegiate Champion, lead18 other teams in the race for the remaining seven seats in the “Sweet 16” Finals. The Green Archers will play at the Naga zonal games (November 12 to 14) for one of the finals seat.

For updates on progress of teams as they continue the journey in the 2009 Philippine Collegiate Championship games, visit the official website, www.CollegiateChampionsLeague.net or send email enquiries to PCCL_secretariat@yahoo.com.

Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, SalcedoVillage, 1227 MakatiCity. Or e-mail me at reydgamboa@yahoo.com. For a compilation of previous articles, visit www.BizlinksPhilippines.net