The creation of the
standard price index that will serve as official guide for valuing
residential properties in the country is on track and is set for
completion before its formal launching likely within the year, a Bangko
Sentral ng Pilipinas (BSP) official said.
At an economic forum
held in Makati City on Tuesday, Assistant Governor for the Monetary
Policy Subsector Ma. Almasara Cyd N. Tuaño-Amador said the so-called
Residential Property Index (Repi) has already been presented for
approval by the BSP Monetary Board only recently.
The index was earlier
cited by BSP Deputy Governor for the Monetary Stability Sector Diwa C.
Guinigundo as a BSP initiative helping regulators and real-estate
practitioners to further monitor prices in the sector and prevent price
misalignments that led to property bubbles.
“We are doing it in
stages. So what is keeping us from publicly disseminating is that we
have [yet] to present it to the PSA [Philippine Statistics Authority].
Since they are still organizing themselves, they haven’t formed the
board yet. Once they have the board already in place, then we present
it. Whenever you come up with indices—that is the process,” Tuaño-Amador
said.
The BSP official
explained that the RePi is focused primarily on the residential sector
but that the central bank hopes to expand the mechanism to the
commercial sector in the future.
She also said the
index only covers prices of residential property in the National Capital
Region (NCR) as there were some “difficulties” in gathering data from
places outside the country’s capital. This, too, was seen broadened in
coverage after the initial index had been launched.
The index is said to
be a function of several indicators, including both from the supply and
demand curve of the industry. In terms of supply, Tuaño-Amador cited the
cost of materials and business permits as some of the considerations,
while in terms of demand, they measure it through the number of
applications of permits, among others.
The PSA is expected to
make a critical examination of the prepared index and will make
suggestions or fine-tuning measures, if any, before releasing it to the
public.
The BSP has imposed more stringent monitoring of the real-estate sector a few years back, especially the
banks’ collective exposure to real-estate loans and instruments. said
the real estate sector is an obvious sector where bubbles form.
“Because it is the
largest asset that any household can own so fundamentally, it can be an
obvious candidate for possible misalignments. But my thinking is that…it
could be a candidate but we are not seeing signs of that [bubble] yet,”
she said.
According to Amador,
the rise in property prices observed in the market today is due to the
structural shift of a growing population in terms of its number and in
terms of income. She also cited the rise in demand from overseas
Filipino workers to own residential property in the Philippines.
“What we saw was some
correction in the prices of residential property in 2009 to 2010, so
there was a correction and now it is growing. But it is still
manageable, the demand is being driven by an organic story,” Amador
said.
“There is an increase
in property prices – in residential and office spaces – but I don’t
think it is getting ahead of itself,” she added.
source: Business Mirror
