Recalibrating the housing market to meet real demand

THE Philippine housing market is at a pivotal point. Development has accelerated in recent years, but the growing disconnect between property prices and household incomes have become harder to ignore. This challenge, however, also presents an opportunity to rethink strategies, adjust priorities, and align the housing supply more closely with the realities faced by Filipino families.

- By Roy Amado Golez, Jr.

UNDERSTANDING THE INCOME - HOUSING GAP

The Philippine Institute for Development Studies (PIDS), the government's socioeconomic research arm, helps shape policy through evidence-based analyses. Its 2023-2024 Economic Policy Monitor: Wealth Creation for the Expanding Middle Class in the Philippines shows that in 2021, families earning below P24,060 per month were classified as poor to low-income, while those earning between P24,060 and P48,120 fell into the lower-middle-income bracket. Together, these groups account for 82.6% of households nationwide.

Assuming a 6% annual income growth since 2021 and no changes in the number of families per income class - families at the upper end of this bracket could afford homes priced up to around P2.9 million under favorable financing conditions.

Yet, the Bangko Sentral ng Pilipinas' (BSP) Q1 2025 Residential Property Price Index (RPPI) shows median nationwide house prices at P2.95 million and condominiums at P4.35 million. In Metro Manila, houses average P7.72 million and condos P4.81 million. Even in traditionally more affordable provincial markets, median prices have climbed to P2.85 million for houses and P3.37 million for condominiums.

The BSP's recent shift from the Residential Real Estate Price Index (RREPI) to the more comprehensive RPPI offers a clearer view of price movements across regions and property types - and reinforces the finding that most Filipino families are priced out of the median housing market.

PROPERTY PRICES RISING FASTER THAN INCOMES