By Cai U. Ordinario & Roderick L. Abad
Conclusion
THE early turnover of relocated houses has discouraged recipients from paying their dues, further complicating the country’s housing conundrum, according to Vice President Maria Leonor G. Robredo.
In a recent briefing in the United States, the Housing and Urban Development Coordinating
Council (HUDCC) chairman said this is one of the problems hobbling an effective government housing program.
“Magpapatayo ang gobyerno ng pabahay, huhulug-hulugan ng mga tao, iyong mga tao karamihan maghuhulog ng ilang beses pero [The government will build houses and the recipients will make a few staggered payments and after a while] they won’t pay anymore because ownership has been turned over to them already,” Robredo said.
“Iyong fund hindi nagiging revolving. So na-stall ang problema ng gobyerno [Because of this, the fund is no longer a revolving fund. The government’s stuck with this problem],” she added.
Robredo said to solve this problem, the country can look at the experience of Singapore and Thailand, which started solving their respective housing backlog through public rentals.
She explained that in these countries, citizens who cannot afford buying a home can start with public rental units. Once they get enough income, they can now start buying their own property.
Robredo said Thailand was able to solve their housing problem in 10 years. There are no “squatters” and “street people” there, she added, sans citing the source of her data.
“I think that model can be replicated in the Philippines. Not exactly that model, but I think we can tweak it to make it more appropriate for the condition,” she said. “We have to think outside the box already.”
Historical roots
THE problem of housing can be traced back to the end of the Second World War in 1945. According to historians, the massive number of people displaced led to the development in Manila of settlements of squatters, or “informal settlers” as they are now called.
Many war refugees settled at Tondo Foreshore land, a reclaimed area north of Manila and within the walls of Intramuros.
Official estimates showed there were 46,000 squatters in 1946. That number doubled to 98,000 by 1956 and ballooned to 283,000 in 1963.
Came the industrialization of Metro Manila in early 1970s, informal settlements in the country apparently started to grow.
Rural-to-urban migration intensified and the number of job seekers in the metropolis exponentially rose.
As a result, the country’s housing backlog began apparently in the 1980s, according to Charlito Ayco, CEO of Habitat for Humanity Philippines Inc.
“One reason is the rapid urbanization through migration from the rural areas to the cities,” Ayco explained. “This is a global phenomenon and it has no precedent in human history.”
Purchasing power
AYCO said the second obvious reason to the housing needs in the country is the mismatch between what people can afford to pay for housing versus what the market can supply.
“The market works at the higher categories of housing [economic dwelling up to high-end], where the ‘market’ mechanism works,” the Habitat for Humanity Philippines top executive said. “But there is market failure in the low-income sector.”
He pointed out that the factors that cause or result in higher cost of housing production includes high development cost due to regulatory inefficiencies and high cost of land, among others.
Ayco’s views is echoed by Ibon Foundation Inc., which believes that “big construction firms offer low-cost housing at rates that neither the unemployed nor the needy can afford.”
“Because low-cost housing is a component of real-estate business, it remains unaffordable to many homeless Filipinos,” an entry on Ibon’s weblog said.
According to Ibon, “social services and utilities were further commodified” under the administration of President Benigno S. Aquino III.
“The Aquino administration’s policies favored businesses over people’s welfare,” Ibon said. “The centerpiece [Public-Private Partnership] Program, for instance, has allowed the private sector to profit immensely from people’s money, even in public utilities and social services, such as education, health and housing.”
In the 2012 Family Income and Expenditures Survey (FIES), an average Filipino family can only allot 12.61 percent of income for housing (rent/rental value, or house and lot and house maintenance and repair).
The low level of affordability of intended beneficiaries further aggravates the housing problem.
Families from the first to the fifth income deciles can only spend 2.2 percent to 6 percent of their income for housing, the FIES data showed.
Backlog factors
THE lack of housing provision in the country has been further exacerbated by the onslaught of natural calamities that hit several parts of the country over the years.
Those residing along the major water tributaries and other danger areas were the most vulnerable, who bore the brunt of the adverse impact of climate- change drivers.
Another factor is the limited budget of the government for housing, which accounts only for less than 1 percent of the total annual budget of the government since 2008, except during the years 2011 and from 2013 to the present.
Government data show that the state’s 2008 national appropriation for housing was P4.96 billion, or 0.40 percent of the total budget. That figure grew nearly sevenfold in 2016 to P33.75 billion, or 1.12 percent of the total spending allocation.
The short supply of state-owned land for residential use and inaccessibility due to land administration and management problems also hinder the production of housing nationwide.
Based on the latest report of the Department of Environment and Natural Resources (DENR), only 0.54 million hectares, or roughly 4 percent of the estimated total land area of the country of about 300,000 square kilometers are available for housing and urban uses.
Meeting demand
GIVEN the current and future needs for housing, the national endeavor of roofing every Filipino is a long way to go, according to Ayco.
“Clearly, there is a need to increase production to catch up,” he said.
Ayco cited a study by the University of Asia and the Pacific and the Subdivision and Housing Developers Association (SHDA) Inc. that said the market should have produced 1 million units from 2012 to 2016 to catch up with the backlog.
He said the study also saw production should ramp up to 2 million from 2017 to 2020, and 5 million units from 2021 to 2030.
Given these targets, however, Ayco raised concern on the buying capacity of the people, especially those in the mass market.
But, citing again the UA&P, that remains to be seen as more than 800,000 families cannot afford to buy a house even if a unit is priced at P365,000 ($7,783.30 at current exchange rates).
Market behavior
AYCO said the pricing prompts most of the residential development projects in the country to cater mostly to the low-end to high-end markets.
“For any businessman who would like to have a return on his money, it does not make sense to build
houses and sell it to the socialized sector,” Ayco said. “He might as well sell it at the better-paying sector, which is the low income, economic or even the high end.”
Dwelling units for low-income market are priced around P600,000, while for the economic sector, a unit costs between P800,000 to P900,000 each.
The midend condominium projects are those with a price range between P1.5 million and P10 million, as high-end units are offered at P10 million and above each.
“So without the targeted subsidy, the very poor cannot afford [to buy housing units],” Ayco said. “The government has to intervene and provide subsidy so that the people can afford to buy what the private sector is going to produce.”
He cited, for instance, the P50-billion five-year housing program for informal settlers in danger areas in Metro Manila. The program, approved by Aquino in 2011, aims to relocate the 104,000 families of informal settlers living in areas deemed risky or dangerous for humans and those near waterways of Metro Manila.
Poor housing
AYCO cited a World Bank study that revealed beneficiaries can only afford to pay P397 as monthly interest to the housing unit.
“If you belong to the poorest of the poor, you will not pay the actual cost of the house, but only the 10-percent [interest],” he said of an economically viable solution to the country’s housing backlog.
While this remains a suggestion, Ayco said this is already a proven model in South American countries, particularly in Ecuador. He said families in that country save 10 percent of their income, which the government matches with a 20-percent grant.
The remaining 70 percent, according to Ayco, is being provided through loans from a partner bank.
“It’s really the bank funding it. It’s not a pure dole-out,” he said. “It’s an investment.” Ayco noted that program has been started in Peru and Chile and recently in Brazil.
Since housing creates a big impact to the economy, Ayco called on the government to start investing into it, given the resulting multiple effects.
“Housing is one of the industries where local input is very high,” he said. “In other words, it’s not a losing proposition. Solving a social problem, eventually, is just a bonus.”
Private assistance
THE real-estate sector’s residential segment is the most competitive at present, since a lot of players have gained high profitability in recent years.
Given the estimated demand for housing this year and beyond, however, a right match of supply vis-à-vis demand is, indeed, of national concern these days, Ayco said.
“Every year, on average, new housing needs reach [more than] 300,000,” Ayco said. “The annual output is only like 200,000 and less. So the backlog piles up.” But he says it’s a good thing some industry players are now giving space for the socialized sector, where housing is highly needed.
Some of these players, he noted, have been venturing in low-cost housing with units sold at below P3 million each. Others target the affordable segment outside Metro Manila. One company is expected to supply a total of 12,453 units, where 46 percent would come from Luzon, 30 percent from the Visayas and 24 percent from Mindanao.
Public support
AYCO urges the public to continue supporting the cause of groups, like Habitat for Humany, to achieve the national goal of reducing the total dwelling deficit in the country by 20 percent in the year 2020.
Approximately, around P320 billion is needed if each of the 800,000 dwelling units the organization seeks to build costs P400,000 each.
“That falls at the range of socialized house and lot costing P450,000 and below,” he said. “Practically, the socialized sector is an abandoned sector. Why is that? Because the market is not supplying it now. And that is where we want to be engaged with.”
Admitting that the housing backlog is here to stay, Ayco also called for cooperation among other similar organizations to at least mitigate, if not fully solve, this problem.
“I think what Habitat and other organizations like us can do is try to influence policy on housing provision in the country,” he said. “We have to increase the awareness of people that this housing is really a societal problem, and that it can be solved.”
2020 goal
HABITAT for Humanity, on the other hand, aims to build around 800,000 units in the next five years. This is in line with the homebuilder group’s 2020 goal to help address at least 20 percent of the housing backlog.
According to Ayco, four out of 10 Filipino families today do not own their house and don’t have security of land tenure. He said the same ratio applies to those who live in urban slum areas.
“Our vision for the Philippines is total eradication of lack of housing, and that all Filipinos must live in a decent house,” he said. “So what we do is we bring people together to build homes and communities. The home is just an entry-point.”
According to him, Habitat wants “people living in that community will really have a very active community.”
“Ultimately, as a Christian organization, we want to bring hope to the people.”
High leakage
ANOTHER priority now, Robredo’s Spokesman Georgina Hernandez said in a radio interview on Tuesday, is focusing on in-city relocation to prevent informal settlers from being far away from their place or work of basic services.
Robredo earlier said the government has done off-city relocation to lessen its expense for land. However, these efforts were unsuccessful because of high leakage.
She said those who were given houses were those already living in Metro Manila. Further, Robredo said those who receive these off-city relocations sell their homes and go back to the city.
It does not help that services, such as transportation and livelihood opportunities, are scarce in off-
city relocations.
“Sa mga konsultasyon ni VP Leni sa mga urban-poor groups ay hangga’t maaari kung may lokasyon tayo, dapat ito ay gawing on-site at hindi ito malayo sa kanilang ikinabubuhay [In the Vice President’s consultations with urban- poor groups, they indicated that relocations should be on-site or near to their place of work],” Hernandez said.
“At kung kailangan naman pong i-relocate, ang tinutulak po ni VP Leni ay dapat kumpleto ang mga komunidad na ibibigay sa kanila. Dapat may sapat na access sa trabaho, edukasyon, kalusugan, kuryente at patubig, kaya sang-ayon po si VP Leni sa panawagan ni Pangulong [Rodrigo] Duterte na huwag magkaroon ng demolisyon ng walang relokasyon [And if there are those who will be relocated, the Vice President wants them to be placed in complete communities. They should have access to work, education, health, electricity and water. This is the reason the Vice President supports the call of President Duterte not to have demolitions without relocation],” she added.
Lacking time
AS the new housing czar, Vice President Robredo is keen on pursuing a comprehensive and integrated approach to housing and urban development, which are at the heart of her work as chairman of the HUDCC.
Robredo said the thrust is to create a comprehensive urban-development plan that will address the housing backlog and ensure that government funds are not wasted.
This is a challenge, given the data constraints and the fact that HUDCC is only a coordinating body. It works not only with various agencies of the government, but also six shelter agencies.
The country has six shelter agencies and these are the National Housing Authority, Social Housing Finance Corp., Home Development Mutual Fund or the Pag-IBIG Fund, Home Guaranty Corp., Housing and Land Use Regulatory Board and National Home Mortgage Finance Corp.
“To coordinate the efforts of the six agencies under it. There is still a lot to be done in terms of policy is concerned,” she said. “There is a lot to be done as far as institutionalization of processes and mandate is concerned.”
However, Robredo admits the task is daunting because of time.
“There is so much that needs to be done. Kulang na kulang ang oras [There isn’t enough time],” she said.
Image credits: Nonie Reyes