Analysts at Moody’s Investors Service have ruled out the unwarranted ramping up of real- estate prices no matter the fear of such an event having built up in recent years and threatening the country’s growth.
Its analysts said the Philippines is not even close to having a property bubble, as the rise in housing prices remain in lockstep with the country’s anticipated growth path and the central bank continues to keep a keen eye on lending to the real-estate sector.
In a research note on the Philippine financial system, Moody’s said residential- and commercial-property prices have risen in tandem with the country’s local output, measured as its gross domestic product (GDP), over the past few years, alleviating worries that the rise in prices in the property sector is pushing prices higher.
Moody’s also said the constitutional provision limiting foreign participation in the property market to only 40 percent of total per property project acts as a natural deterrent to massive inflows of speculative capital pouring into the real-estate sector from sources overseas.
The global credit watcher, likewise, said the rather rapid rise in commercial-property loans, despite more recent and more stringent regulations on the expansion of the business-process outsourcing sector, supports the demand.
Such measures were meant to cool the property sector and had been keenly noted by the credit watcher.
For instance, the regulators have introduced in mid-2014 so-called real-estate stress test, which aims to ensure the banks’ loss absorption buffers are robust enough to withstand severe downturn scenarios.
The Bangko Sentral ng Pilipinas also just recently issued a circular mandating lenders to report to the central bank the details of every residential real-estate loan taken out beginning June this year, as the regulators try to bridge the so-called real-estate information gap in the country.
Thus, for each residential real-estate loan that a bank has granted, respondent financial institutions are required to provide the following data in their mandated quarterly reports: month of loan granted/booked; location of property; type of property; type of housing unit; appraised value of housing unit per square meter; floor area of the housing unit; number of floors; and number of bedrooms.
The effective age of the housing unit, appraised value of lot per square meter, total area of lot, total appraised value of property, housing segment, acquisition cost and name of developer should also be provided.