The Market Monitor Minding the Nation's Business
By Riza Lozada
The country has among the world’s cheapest cost for housing but the income of most Filipinos is not enough to afford to purchase a home for their family.
Figures from the Pag-Ibig Fund or Home Development Mutual Fund (HDMF), however, indicated that an increasing number of Filipinos, with higher income, are now borrowing to buy a house. Pag-Ibig Fund reported posting its highest loan take out ever at P57.31 billion in 2016.
Pag-Ibig Fund President and CEO Darlene Marie Berberabe said the total amount of loan take-out in 2016 was the highest in the shelter fund’s’ history of 36 years.
A total of 77,503 borrowers were registered in 2016, also the highest for Pag-Ibig fund.
In 2016, Pag-Ibig’s total assets reached P439.6 billion while earning a gross income of P38.24 billion and a net income of P24.91 billion, 70 percent of which are declared as dividends that accrue to the members’ total accumulated savings with the fund. Berberabe said this year the fund will offer housing units starting at P300,000 for minimum for an initial 12,000 members who are minimum wage earners, Berberabe said. In a list released recently by expatriates community network InterNations, the Philippines has the fifth cheapest cost of housing in the world behind Ecuador, Thailand, Hungary and Mexico.
The annual survey called Expat Insider 2016 analyzed the cost of putting up a house in 191 countries across the world. Over 14,000 respondents were asked about their experience of relocating to another country.
Investment bank Credit Suisse analyst Danielo Picache said average household income in the Philippines is low and that affordability is a key driver to total residential demand.
Last year, Pag-ibig delivered 24,983 socialized housing units worth P8.51 billion representing a 33 percent share of the total number of new housing units for the year and 15 percent share in terms of loan take-out.
The lowest non-performing loan ratio of seven percent was also achieved in 2016.
The fund made its service accessible to its 17.2 million members by increasing its presence locally and overseas, with branches nationwide growing from 38 in 2010 to 119 in 2016.
Picache said that the state fund has a long way to go, however, before it can substantially reduce the housing backlog in the country.
“We believe improvement in affordability is minimal in the next 2-3 years given long-term mortgage financing is still limited such as government financing schemes and programs have generally been unsuccessful and banks are risk-averse to lend long-term to consumers.
Picache estimates that payment for required monthly mortgages for a medium-priced residential property already accounts for about half of a typical household’s average monthly income.
This amount stretches an average Filipino households’ budget given that housing would normally just account for 13 percent to 27 percent of total monthly expenditure, he said.
Berberabe, however, said Pag-ibig will be introducing more value-added services including partnership for granting of discounts through loyalty cards among medical and educational institutions, shopping centers, health institutions and cooking gas suppliers.
Partners providing discounts under Pag-Ibig’ loyalty card will increase to 213 this year from the current 163, she said.