Demand for low-cost housing remains strong

CEBU, Philippines - The demand for socialized and economic housing remains strong in the middle market segment, but the rising cost of property development has also become a challenge to developers.

Beverly Dayanan, CEO of Sunberry Homes, Inc., said the price ceilings for socialized housing is P450,000 and below while for economic housing is P1.2 million and below.

While the demand for these types of real estate projects has significantly expanded, Dayanan explained that developers have also been coping up with the rising cost of land, construction materials and real property taxes.

“The main challenge here is how you can balance the cost,” she told reporters in an interview, adding the development cost of, say, one housing unit should not go over the price ceiling for affordable housing.

Increased price ceiling

In a resolution passed last year, the Housing and Urban Development Coordinating Council increased the price ceiling for socialized housing from P400,000 to P450,000.

The change was made after the council and the National Economic and Development Authority considered the price of raw land, construction materials and consumer price index.

Last year’s hike was based on the National Statistics Office’s data which indicated a growth of construction materials’ wholesale price index at 18.3 percent and consumer price index at 16.71 percent.

In addition, the Urban Development and Housing Act of 1992 defines socialized housing as housing projects done by government or private sector for the underprivileged and homeless citizens. It also includes sites and services development, long-term financing, liberalized terms on interest payments and other benefits.

Aside from the mentioned factors, the official also cited the scarcity of development resources and property management costs as other considerations that mass housing developers need to take into account.

“The truth of the matter is in reality, this is where the demand is coming from. And if you look at our market, it is really the wider base of the market that really needs it (the low-cost housing),” Dayanan said.

She reported the mass housing backlog in Cebu is approximately at 200,000 to 300,000; while the country has three million backlog in housing.

This reality should simultaneously urge developers to invest in developing socialized housing to meet the growing demand, cater to low-end and middle-end customers and solve the existing backlog.

She added it is likewise the city’s growing population that is driving the demand of low-cost housing developments.

For instance, economic housing developer SHI, an affiliate of Contempo Property Holding, Inc., is investing into mass housing project in a 2.5-hectare land in Barangay Soong in Mactan with an initial capitalization of P100 million.

Dayanan said developers must answer the call of the growing demand for low-cost and economic housing.  (FREEMAN)