Why is there a housing crisis?

A 2016 University of Asia and the Pacific (UA&P) study found that the country will have a housing need of
12.3 million by 2030—given a backlog of 6.7 million from 2001 to 2015, and a projected housing demand
of 5.6 million from 2016 to 2030.

Out of that 12.3 million housing requirement, here’s the affordability table: (1) 15 percent, or 1.88
million, will need to be built for households who can’t afford to take on any form of housing loan nor
subsidy—they are simply too poor; (2) 22 percent, or 2.7 million, can afford socialized housing (P450,000
and below); (3) 50 percent or 6.2 million, for economic housing (P450,001 and P1.7 million); and (4) 12
percent, or 1.53 million can afford low-cost housing (P1.7 million to P3 million).

The same study also found that in 2015, there was an excess of around 253,300 high-end (or open
market) houses and 307,740 mid-priced homes, many of which were situated within the National Capital
Region (NCR) and the country’s other urban centers.

The numbers point to the huge and continuously growing housing crisis in the country, where decent
homes are becoming too expensive but affordable options are being built farther and farther away from
economic centers—ultimately adding to the misery of working people.

Housing is one of basic human rights. No less than the Constitution mandates the State to ensure it,
especially for “underprivileged and homeless citizens in urban centers and resettlement areas.” But as
UP School of Economics Professor Emeritus Gerry Sicat noted in a recent column, the State hasn’t been
able to fulfill this role given the fact that construction of affordable housing has been left mainly to the
private sector.

In fact, the State enjoyed early success through the Philippine Homesite and Housing Corp. (PHHC), which
is the forerunner of the National Housing Authority as the lead agency of the government for housing
projects. The PHHC, however, started to sell off its vast landholdings, marking the start of a shift from a
state-led to a private-sector driven housing policy.

Sicat explained that due to a combination of market-driven forces and policies on rent control and
mandatory compensation for the eviction of squatters, the housing supply for workers within city centers
became tighter and tighter through the years. This opened the opportunity for rich land developers to
come in, snap up landholdings, and landbank—to eventually become the primary source of housing.
Because the State stayed back and reneged on its mandate, the result has been overly burdensome for
many workers—housing that is unaffordable and distant, many even hastily and shoddily built. This
housing crisis is part of the reason thousands of our workers have to spend up to three hours a day on the
road to and fro from their homes and workplaces. Such crisis demands the full attention and effort of our
leaders.

SOURCE: https://businessmirror.com.ph/2018/05/03/why-is-there-a-housing-crisis/

The mass housing mess: Why Filipinos continue to struggle with owning a home

MASS housing should be for all, but many Filipinos, particularly those belonging to lower-middle income
families, still feel left out of the equation.

The family of Bituin Mendoza (not her real name) is an example. Her family has been a renter for over a
decade. Her mother, a domestic helper in Hong Kong, has been saving up for a home since she started
working abroad 13 years ago.

They are currently “renting” a home from her father’s friend who is currently an overseas Filipino worker
(OFW) in Dubai. The friend has been behind in their mortgage payments and, as the caretakers of the
home, Mendoza’s mother pays for the back payments and serves as their rent.

Her mother’s remittance helped pay around P150,000 worth of back payments (about $2,857.88 at
current exchange rates). Around P100,000 more is needed before all the payments are covered. Amid all
their bills and obligations in ensuring that they do not fall behind on their rent and utilities payments is
the dream that someday they will come home to a house they own.

“Kaya hindi masyadong ginagalaw ni Mama ’yung kita nya para ’pag umuwi na siya permanently, ’yun na
’yung next project nila. Kailangan lang matapos yung utang sa bahay para makaalis din kami [This is the
reason Mama is saving her money. When she comes home permanently, buying a house will be their
(parents) next project. We just need to finish paying for the house so that we can finally leave],” Mendoza
said.

As for Brix Villaroel, owning a home is on the horizon for him and his family. His family, composed of his
mother and a younger sibling who is still in school, is currently renting a home in Vito Cruz, Manila.
Initially, their rent started at P15,000 (around $285.79) a month and steadily increased to P18,000
monthly.

A couple of years back, Villaroel and his mother scouted for a place they could finally call their own. They
found a P2-million condo in the area and entertained the thought of buying it by securing loans from the
private sector and the government. But they found that it was quite small for the amount of investment
they needed to make.

Another hurdle is Villaroel’s tenure: he’s been working less than three years for the company. This makes
him ineligible for a loan from Home Development Mutual Fund (HDMF), more commonly known as Pag-
Ibig Fund. This sets back his and his mother’s plan to within two or three years.

While owning a home is a good thing, for single mother Estrella Dimaculangan (not her real name), it is
not the most practical.

She said renting a house is the most affordable option for her right now. Raising a child on her own after
her partner passed away is not easy and the mounting bills associated with schooling and health care can
take their toll on a meager salary.

Dimaculangan said she is currently living with her family in a house they have been renting for over 30
years in Singalong, Manila. Since her sister married the son of their landlady, they only pay a small rent,
around P2,500 a month. Their simple home is just a studio-type house and she shares it with four other
family members, including her child.

She said even if there was an option to secure a loan from Pag-Ibig, she did not entertain it because she
thinks she would not be able to meet the payments given her salary and the cost of raising a child on her
own.
Dimaculangan also recalled the experiences of a friend who defaulted on her Pag-Ibig payments for a
house in Molino, Cavite. The friend even offered her the house but as she was averse to securing loans
and the house was quite far from her work and family, she did not consider buying it.

“Sila Nanay may pwesto sa palengke pero hindi pang-malakasan kasi gulay lang ’yun, eh. Ako naman,
single parent so ’yung perang hawak mo, kailangan mo talaga i-budget [Mother sells vegetables in the
wet market but the profits are not that much. As for me, I’m a single parent so I had to budget every peso
I have in my pocket],” Dimaculangan said.

Housing and income

MENDOZA, Villaroel and Dimaculangan are among the millions of middle-income household members
who are renting nationwide. Based on a rental study conducted by the Philippine Statistical Research and
Training Institute (PSRTI), middle-income families accounted for the bulk or 889,033 families of the 1.5
million who are renting homes nationwide in 2012.

Based on the PSRTI study, Mendoza would classify under the rental class of P10,000 to P14,999, while
Villaroel would classify under the P15,000 and over, and Dimaculangan would belong to the P2,000 to
P3,999 level.

The PSRTI said there were around 33,200 households in Mendoza’s level of rent while in the case of
Villaroel, there were about 10,969 households. Dimaculangan belongs to the second-largest group with
467,693 households renting at the P2,000 to P3,999 level.

The study stated that the rental level of P1,000 to P1,999 a month included the most number of
households at 497,807 families. Also noteworthy is that Dimaculangan belongs to the 122,034 families
paying around P2,000 to P3,999 for rent and is a female-headed household.

Ateneo Center for Economic Research and Development (Acerd) Director Alvin P. Ang said middle-income
households are especially sensitive to price. Such households are looking for investments that would
allow them to maximize their hard-earned pesos.

He said this means they are looking for homes that are affordable and near their place of work. They also
preferred worthwhile investments that can accommodate their families comfortably. The problem with
these requirements is that these usually come at a price, a price that few middle-income households can
afford.

“I think the lower middle-income class is finding it difficult to buy their own home and not the entire
middle-income class. Clearly, the options presented by real-estate firms and Pag-Ibig aren’t attractive
because current levels of disposable income won’t allow the lower middle-income class to allocate some
amount for housing. If they allocate money for housing, they’ll surely sacrifice spending for necessities
and consequently lower their current standard of living,” University of Asia and the Pacific School of
Economics Dean Cid Terosa said.

Part of this difficulty, not only for the lower middle-income households in the Philippines, but also
Filipinos of higher or lower incomes, is the fact that the growth of real wages has been flat.

Philippine Institute for Development Studies (PIDS) Vice President Marife M. Ballesteros said this makes
the cost of homes the primary concern when buying housing units.

Ballesteros referred to the presentation made by the Housing and Urban Development Coordinating
Council (HUDCC) on its flagship program, Balai Filipino Housing Program (Building Adequate Livable
Affordable and Inclusive Filipino Communities). Balai, a Malay word for house, showed that the ceiling for
socialized housing programs remains steep for millions of Filipino households.

In Memorandum Circular 2, series of 2018, issued last September 2018, then HUDCC Secretary General
Falconi V. Millar said the ceiling for socialized housing is P700,000 for a 22-square-meter (sqm) property,
while P750,000 is the ceiling for a 24-sqm property in Metro Manila or the National Capital Region and
other areas.

These other areas included nearby areas where millions of workers in NCR currently reside, such as San
Jose del Monte City in Bulacan; Cainta and Antipolo City in Rizal; San Pedro City in Laguna; and Carmona,
Imus and Bacoor in Cavite.

The Balai Housing Program is the Duterte administration’s 10-year national housing program strategy to
close the country’s shelter gap. The program aims to improve government efforts in addressing Filipinos’
housing needs, with the private sector playing a significant and pivotal role.
However, based on the 2015 Family Income and Expenditure Survey (FIES), the average income in the
Philippines is P267,000 per household per year. The Philippine Statistics Authority (PSA) estimated that
there were a total of 22.73 million households in 2015.

“In reality, it’s going to still be affordability that matters,” Ballesteros said. “Based on the HUDCC
program, Balai, in their presentation, [showed] socialized housing was still expensive, around P750,000,
without them thinking that people won’t be able to afford that because real wages are flat. So even if you
try to explain to them, they seem not to understand.”

She added that, with real wages being flat, the chances of Filipinos getting a loan from a private bank
would be slim. This is the same consideration when Filipinos resort to in-house financing in real-estate
companies. This usually helps them secure their units but they still need to pay a certain amount of equity
and would have to pay longer to own their units.

She said that even government institutions like Pag-Ibig will also not be as open to lending higher
amounts to individuals who do not have the capacity to pay for certain housing units.

Due to these constraints, middle-income households will resort to renting units. The only problem is that
you can rent for many years and pay amounts equivalent to paying for your own home without owning
the house you are staying in.

“Even regular employees, I agree, have no choice but to rent,” Ballesteros said. “Our drivers here, even
after several years, are still renting. And then they rent from informal rental facilities because that is
within their budget.”

Housing for the poor

BUILDING a house for every Filipino family is the Philippines’s “One Dream.” Many politicians have
attempted to reach this dream call and several of them could be considered successful.

These include the housing program in Quezon City dubbed “Bistekville,” which has been undertaken by
the local government unit (LGU) with Phinma Property Holdings Corp. since 2011. This was the city’s
response to the housing needs of more than 200,000 families living in areas considered danger zones, 80
percent of which were informal settlers, according to nongovernment organization Habitat for Humanity.
Bistekville housing units can be availed of by Quezon City residents who are considered informal settler
families, or ISFs. These families are those living along rivers, creeks and esteros, those under transmission
lines, those affected by infrastructure projects and those evicted through court order. They must also be
able to pay monthly amortizations and should be members of Pag-Ibig Fund.

As payment, the LGU allows flexibility to future home owners. For example, a P400,000 unit can be paid
from one year to 30 years. Those choosing to pay for their units for three decades would need to pay
P2,645.30 per month, while those who intend to pay for the unit for one year would need to pay
P34,673.67 a month.

Other LGUs, such as Pasig City, also have a housing program that involves the construction of medium-
rise buildings in various in-city relocation sites, such as Amang Rodriguez Avenue, Manggahan, and
Barangay Santa Lucia, among others.

Ballesteros added the Pasig City LGU is also accredited by other cities in terms of relocating informal
settlers. She said Pasig City provides full support to these families who are relocated to other cities and
municipalities. A memorandum of agreement with these cities and municipalities makes the move
painless for ISFs in Pasig.

“The receiving LGUs would often complain ‘you’re putting all your squatters here in our areas,’ but Pasig
is different,” Ballesteros said. “They welcome Pasig ISFs because they receive full support, meaning
complete resettlement sites.”

The primary issue here is the capability of LGUs to provide the needs of ISFs for in-city relocation or
resettlement in other areas. This required LGUs like Pasig and Quezon City to adjust their finances to be
able to raise funds for socialized housing and to resettle ISFs.

In the case of Pasig, Ballestros said, it included in its revenue code that socialized housing funds will come
from 1 percent of the assessed value of houses worth P1.5 million. This is coupled by efforts to charge
idle land taxes. In the case of Quezon City, the recent increase in real-estate taxes went to socialized
housing efforts.
Targets, headwinds

THESE efforts work toward helping the country meet its housing targets under the Philippine
Development Plan (PDP). Under its Chapter 12, targets focused on providing access to affordable,
adequate, safe and secure shelter in well-planned communities in the hope of addressing income
inequality and meeting its goal called “AmBisyon 2040.” Ambisyon 2040 wants to meet the ambition that
Filipinos own a single detached home by 2040.

The government also intends to decrease the proportion of urban population living in informal
settlements from 7.53 percent in 2016 to 5.53 percent by 2022.

The government also aims to improve the proportion of socialized housing targets met to housing needs;
improve the proportion of low-cost housing targets met to housing needs; and deliver socialized and low-
cost housing units.

The PDP aims to increase the proportion of socialized housing by 16.53 percent and low-cost housing, 5.5
percent by 2022 from the 2016 baselines of 8.6 percent and 5.27 percent, respectively.

In terms of delivering socialized housing units, the PDP aims to increase delivered socialized housing to
1.086 million by 2022 from 82,612 in 2016. For low-cost housing, the target is 361,398 units by 2022 from
50,626 in 2016.

The National Economic and Development Authority (Neda) said these targets may be hampered by
suitable land for socialized and low-cost housing and the availability of basic services/utilities (i.e., water
and power supply) are provided on time.

Further, the Neda said adequate budget for housing may also fall short and issues in land titling, land
conversion and compliance to land development/housing construction documentary requirements
resolved.

Apart from these reservations, Ballesteros said the targets may not have robust baselines considering
that there are data considerations when it comes to determining how many ISFs there are and how many
people are looking for their own homes.
Getting the numbers right, Ballesteros said, is the common factor of Asian countries, such as Singapore,
that have implemented successful housing programs. Determining how many people need homes and
where to find them were basic considerations, she added.

“Actually you don’t have any information, even if you search anywhere: what is the population of the
informal settlers? The numbers are different,” Ballesteros said.

“The only thing you have is the CPH [Census of Population and Housing], but it’s significantly lower than
the estimates of LGUs because they, too, conduct a census. The only problem is that they are not able to
properly monitor, and usually their survey is done only for a single year, after that, we don’t know,” she
explained.

Affordability options

HOWEVER, there are also those who believe the affordability of housing units only becomes a problem
when it comes to low-income and poor households. PIDS Senior Research Fellow Jose Ramon G. Albert
said middle-income Filipinos in general do not have problems accessing housing options.

Albert said these families just need to determine the best option for them financially. However, Albert
also noted the absence of “hard data” to support claims that middle-income households are indeed
having a difficult time purchasing homes.

In fact, there is evidence to the contrary.

Private-sector economist Calixto Chikiamco said real-estate firms always say they are enjoying brisk sales.
Albert added that, however, many of those buying homes were Chinese nationals and/or Chinese
companies.

“I’m not aware of that [middle-income households finding it difficult to buy homes] as a fact. We
wouldn’t have a housing boom if the middle class wasn’t buying,” Chikiamco said, pointing to a property
developer and adding its condominium units are “always sold out and their buyers are middle class.”

On top of these concerns is the fact the Philippines has yet to pass the National Land Use Act (NLUA). The
bill, which has been languishing in Congress for over 20 years, promises to protect prime agricultural
lands, to provide rationalized land-use planning in the country, to consolidate national laws on land uses,
and to address long-standing land-use conflicts.

In 2016, in a report to the United Nations, the HUDCC said passing an effective land-use policy was crucial
in meeting the challenges of rapid urbanization.

Today and tomorrow

EFFORTS that have been recently put in place by the government to meet the country’s long-standing
housing needs include the introduction of the Balanced Housing in 2016 that took effect in 2017 to 2018.
There was also the Manila Bay Mandamus, which was passed in 2011 and is now being implemented.

There’s also Republic Act 10884, or the Balanced Housing Development Program Act, which sought to
amend the Urban Development and Housing Act of 1992. The law sought to make housing more
affordable for Filipinos and encourage more participation of the private sector in socialized housing.

The law created one-stop shops nationwide for the processing, approval and issuance of clearances,
permits and licenses to reduce the number of days in processing housing development down to 90 days.

The law requires owners and/or developers of proposed subdivision and condominium projects to
develop an area for socialized housing equivalent to at least 15 percent of the total subdivision area or
total subdivision project cost and at least 5 percent of the condominium area or project cost, “at the
option of the developer, in accordance with the standards as provided by law.”

Apart from this, recent efforts stated in the Manila Bay Mandamus have also started implementation. The
mandamus ordered the Metropolitan Manila Development Authority (MMDA) to remove informal
settlers near rivers that snake along the Pasig-Marikina-San Juan route and the Parañaque-Zapote-Las
Piñas areas. Removal of ISFs along the Navotas-Malabon-Tullahan-Tenejeros River is also expected. The
mandamus sought to demolish all these structures to help clean up the rivers and eventually Manila Bay.

Ballesteros said the mandamus is forcing LGUs to take a look at their waterways and comply with the
government’s policy to relocate informal settlers. This is also paving the way for LGUs to create housing
and resettlement programs, she said.
DHUD deeds

ASIDE from these, the creation of the Department of Housing and Urban Development (DHUD) is a piece
of legislation that is well-supported by the current administration. Economic managers have endorsed the
creation of the DHUD to “finally put an end to Filipinos’ housing woes.”

The bill has already been transmitted to the President by the Senate and is awaiting the President’s
signature, according to the Chairman of the Senate Committee on Housing and Urban Planning, JV
Ejercito.

However, much needs to be done to make the dream homes of Filipinos a reality.

Ballesteros pointed out that the mindset of the National Housing Authority (NHA), particularly on the
delivery of housing units, has to change. She said the NHA considers “turnover” as the completion of a
housing unit and not the actual turnover of a unit to an ISF or any other household.

She said this could be the reason why many government housing projects were left unoccupied. Such was
the state of the housing units in Bulacan that were claimed by Kadamay members in 2017.

During a visit, Vice President and former HUDCC Chairperson Maria Leonor G. Robredo found the units in
a sorry state: cracks on concrete walls and floors, rusted doorknobs, and warped front doors.

“[For the NHA,] delivered means [there are] physical targets; they were able to build. Whether or not
these houses will be occupied, they are considered delivered,” Ballesteros said. “But now, the DBM
[Department of Budget and Management] is actively requesting that there will be residents for the NHA
projects. This was included in their measures of quality.”

“It [should] respond to a need. Otherwise, if nobody will occupy the unit, you are not responding to a
need. When you say ‘need’ in housing, there are a lot of aspects. You’re not just dealing with one type of
commodity; one characteristic of a commodity,” she added.
Mixed-use tack

BALLESTEROS said the government should also look at mixed-use developments along major
infrastructure projects as opportunities to create socialized housing projects. These include the Northrail
and Southrail projects that are expected to address the housing needs of millions of Filipinos without
endangering their sources of livelihood.

She said the NHA needs to step up in this regard since the bulk of the government’s housing budget is
allocated for the agency. Ballesteros added that even the Department of Public Works and Highways
should also work with the NHA not only in terms of relocating residents when they expropriate right of
way for projects but also find ways to incorporate housing in its projects.

“We still have a lot of areas for expansion. For instance you have this North and Southrail, they should
already think about what can be done there. Imagine that development will run from Bicol to Manila,
that’s a big size of land so government should plan. Part of that area should be for socialized housing,”
Ballesteros said. “Until we do that, it will be the same chicken-and-egg situation. And NHA doesn’t listen.”

The BusinessMirror’s request to interview the NHA and the HUDCC remained unacted on as of press time.

Building houses for all Filipinos is not a one-man job. Ballesteros believes it’s time to move forward with
participatory efforts that encourage the building not only of houses but also of communities.

The Filipino middle class, even the low income and poor, deserve to own a home. It is part of their
“AmBisyon 2040” and it is their hope that this dream of owning a piece of the land of their birth will cease
to be a dream but become their reality.

SOURCE: https://businessmirror.com.ph/2019/01/31/the-mass-housing-mess-why-filipinos-continue-to-
struggle-with-owning-a-home/

Housing program for the country’s workers is not succeeding

The housing industry is a driving force for economic growth in many countries. This is most especially true
in the case of construction for sheltering the bulk of the country’s workforce in affordable housing units.
Housing for low income earners. In the course of years of development, this sector of housing
construction has not been fully exploited for the country. The government has not succeeded in creating
a viable program of sustained housing construction for the common worker. Other developing countries,
especially in our region of East Asia, have been undertaking such programs and these programs have
become part of their stimulus for sustained economic growth.

The construction of affordable housing for many of our common workers has been left mainly to the
private sector to fill up. Because housing for the well-to-do is much more profitable than building for the
poor – both in terms of administration as well as in turning over the amortization of the unit once lived in
– the private sector has mostly concentrated on building housing for those that can afford to pay for
them.

In the meantime, the government has not succeeded in providing housing for workers who have steady
employment. The cost of housing to low income but steadily employed workers as a result is prohibitive.
Their housing need has been neglected.

Much of the government’s efforts in low cost housing have been in supplying housing for squatter
resettlement projects or housing units for victims of natural calamities (such as damage from fire,
flooding, and earthquake).

All this indicates that the government has been unable to take a major leadership role in building housing
supply for occupancy and amortization by the relatively poor, but steadily working people.

The essentials for a sustained housing program are present but… In general, the government has already
put in place many of the institutions that are essential in providing for a housing program that benefits
the masses of working men.

For instance, the essentials of pension programs are in place – the Government Service Insurance System
and the Social Security System, as well as the Pag-Ibig housing fund contributions for employed workers.
These programs are the basic foundation for providing the savings for homebuilding in many societies.

These programs generate savings from the worker payroll, but they have not been fully directed to
support the housing program for workers.

Early in its development program, Singapore was able to undertake a housing program mainly for income
earners in the country. The basic tool for creating demand for housing was the provident fund of workers,
which was essentially their version of the Social Security System. Because of the strong participation of
the government in land estate consolidations and using these for constructing shelters for the working
class, the program succeeded incrementally in building a large stock of housing supply for the working
class.

Strong government participation in facilitating property estate developments for worker housing has
been an ingredient of success in other countries. This has not been the case in our country, for much of
land consolidation in urban areas has been ceded to the private sector’s efforts.
Essentially, the profit motive was the driving force for the private sector. Under this setup, and without
any strong government presence in the market for land, success meant that lands would be developed
mainly – and therefore controlled for land banking – by the private sector.

But years of development in the country has shown a worsening of the housing situation for the large
bulk of the population. The housing for the working class and for middle income families has not kept
pace with the progress of the economy. The general housing conditions of the common worker, among
government officials and the general workforce, has become in general worse. Housing provides a clear-
cut indication of the divide between rich and poor in the country.

New supply of housing units has risen as provided by the private sector. But most of the units constructed
are for those with high income. In the meantime, housing areas among the working class has become
more cramped.

Hence, in recent years, we see the rise of many condominium buildings and high rises in Metro Manila
and some other growing cities in the country, but these units are being bought by those with high income
(including many OFWs and foreign buyers who are seeking housing accommodations in the country, even
as the country is enjoying a building boom lately, which includes the building of housing for those who
can afford expensive units.

Of course, communities where a house and lot is the prevailing motif for housing provision have also
grown. There is a wide gap in the housing supply that is built for those with high income and for those
who can only afford the cheapest housing units. Inexpensive housing fit mainly for the low income earner
are often in far-away locations, which also means high transport cost to work.

NHA’s failure. The National Housing Authority should have been the lead agency to help initiate a
program to provide affordable housing for gainfully employed workers – both in the private sector and in
the government. These are people with steady employment and with income to help pay for their
housing amortization.

Instead NHA has been bogged down in projects that provide highly subsidized housing. It receives budget
allotments to support the programs of housing construction which the recipients cannot fully help to pay
because they are poor and intermittently unemployed.

The investigative report of Ted Failon (ABS-CBN) on NHA’s housing projects last Sunday tracked the
projects designed to help the victims of recent natural disasters such as Yolanda and Sendong.

Also, the Commission on Audit (COA) Performance Audit Report (PAO 2017-02) entitled, In-City Housing
Development Program is a report on the problems of the projects to build housing units to help transfer
vulnerable residents located in waterways, esteros, and river banks.

Both reports reveal the many inadequacies and the failure of the NHA.

SOURCE: https://www.philstar.com/business/2018/04/11/1804662/housing-program-countrys-workers-
not-succeeding#QITFT1qKFy3Z5s2u.99
HOME FOR THE MASSES
It never gets old. The country’s massive socialized housing backlog remains a problem that has plagued
administrations to this day. What’s the current state of socialized housing? Has situation at least
improved?

According to a 2015 presentation by the Subdivision and Housing Developers Association, Inc. (SHDA) in
cooperation with the Center for Research and Communication, over 3 million housing units are needed to
be built for poor and homeless Filipinos for the period 2012 to 2030.
Over the decades, a number of laws had been enacted to help address the problem.
In Republic Act. ( RA) No. 7279, the Urban Development and Housing Act (UDHA) of 1992, also known as
the Lina Law, socialized housing refers to housing programs and projects covering houses and lots or lots
only undertaken by the government or the private sector for underprivileged and homeless citizens,
which shall include sites and services development, longterm financing, liberalized terms on interest
payments.

A beneficiary for the program must be a Filipino citizen, an underprivileged and homeless citizen, must
not own any real property, and must not be a professional squatter or a member of squatting syndicates.
Local government units are tasked to provide socialized housing to their constituents.

SOCIALIZED HOUSING BY THE PRIVATE SECTOR

Based on its provision to have “balanced housing development,” developers of proposed subdivision
projects are tasked to develop an area for socialized housing equivalent to at least 20 percent of the total
subdivision area or cost at the option of the developer within the same city or municipality.

Recent amendments to UDHA effective August 2016 now re- quire developers of condominium units to
also develop socialized housing projects. According to the Housing and Land Use Regulatory Board
(HLURB), the maximum selling price for a socialized house is P400,000 for vertical developments (like
condominiums) and P450,000 for horizontal development (house and lot, row houses). According to the
SHDA presentation, the demand for socialized housing in 2001 to 2011 was 1.14 million units but the
supply stood at 479,765 giving a deficit or backlog of 663,283 units. For the period 2012 to 2030, 1.45
million units are needed for the housing needs of those who can’t afford (and would therefore need
subsidy) and 1.58 mil- lion for socialized housing or a total of 3.03 million units. In 2017, HLURB approved
licenses to sell 126 socialized and compliance housing projects, which consisted of 51,284 house and lot
units, 5,973 lots and 31 condominium units. It was down from 187 projects in 2016 and 169 projects in
2015.

SUBSIDIZED HOUSING BY THE GOVERNMENT

Among the socialized housing projects of the government are the Community Mortgage Program (CMP)
of the Social Housing Finance Corp. and the housing program for soldiers and policemen and for informal
settlers by the National Housing Authority (NHA). The Armed Forces of the Philippines (AFP) and the
Philippine National Police (PNP) Housing Project is a five-year flagship project of the NHA that started in
2011, to address the housing needs of uniformed personnel with low income. Each two-storey unit costs
P140,000 and has a lot area of 40 sqm and a floor area of 22 sqm.
Each beneficiary pays a monthly amortization of P200 a month for the first five years and the remaining
30 years of payment will be computed with a compounded interest method to produce equally affordable
amortization ranging from P400 to P800, NHA said. The PNP and AFP housing projects were to be done in
four phases in 90 sites across the country. A total of 57,328 housing units have been completed as of June
25, 2015.

A 2010 report says that Metro Manila was home to some 2.8 million informal settlers or about 556,526
families. Among the housing programs of the NHA and the SHFC were to build resettlement projects for
informal settler families (ISFs) living along danger areas in Metro Manila.

The following are some of the 17 low-rise buildings built by the NHA for ISFs within Metro Manila from
2010 to 2015:

• San Juan project phase 1 in San Juan City (348 units);

• Tala housing project in Caloocan City (900 units);
• Camarin Residences in Caloocan City (3,240 units);
• NGC phase 4 in Holy Spirit, Quezon City (960 units);
• Manggahan ( MMDA depot) in Pasig City (900 units);
• Cobey/Fabella property in Mandaluyong City (68 units);
• Smokey in Tondo, Manila (970 units);
• Gulayan/Tanglaw in Navotas City (180 units); and
• Disiplina Village in Valenzuela City (594 units).

There were 19 resettlement sites in the outskirts of Metro Manila built by NHA for a total of 10,444
housing units for the same period, which include:

• Pandi Residences in Pandi, Bulacan (1,000 units);

• Norzagaray Heights in Norzagaray, Bulacan (500 units);
• Towerville phase 6 in San Jose del Monte City, Bulacan (2,060 units);
• Southville 8B phases 4 and 5 in Rodriguez, Rizal (1,884 units);
• Hauzville Homes in Tanay, Rizal (1,000 units);
• Verdant Hills in Baras, Rizal (500 units);
• Golden Horizon in Trece Martires, Cavite (2,500 units)
• Don Jose Homes in Calamba City, Laguna (1,000 units).

These housing units near Metro Manila include basic utilities such as power and water as well as paved
roads, drainage and sewerage systems. Schools, multi-purpose covered courts, wet market, transport
terminal and police outpost were built in the housing community. The CMP, anchored on the concept of
community ownership, is a mortgage financing program of the SHFC which assists legally organized
associations of poor and homeless citizens to purchase and develop a tract of land. It aims to assist
residents to own the lots they occupy or choose where to relocate and eventually build new improved
community. Among the CMP projects of SHFC under its High Density Housing (HDH) program to promote
in-city relocation include the Ernestville Home Owners Association (HOA), Inc. Project in Novaliches,
Quezon City, the Alyansa ng mga Mamamayan ng Valenzuela (AMCAVA) Housing Cooperative Project in
Valenzuela City and Bistekville Projects in Quezon City.
The Ernestville HOA project is for the 212 ISFs who used to live along Tullahan River. Supported by the
Quezon City government, the 4,869-sqm project is composed of 12 two-storey buildings with each unit
having a floor area of 26 sqm. The 4.2-ha condominiumstyle AMVACA project is for 1,440 members of the
cooperative who used to live along the danger zones of Tullahan River in Valenzuela. The P576 million in-
city project includes the construction of 30 clustered buildings at three storeys each, commercial areas
including wet and dry markets, daycare center, and clubhouse. The Quezon City Bistekville projects under
the HDHP are refinanced projects of the local government unit of Quezon City specially for ISFs who been
living in waterways and danger areas. Bistekville-1 in Payatas is a 15,651 sqm lot with 334 housing units.
Bistekville-2 in Kaligayahan is a 48,876 sqm lot with 1,078 housing units while Bistekville-4 in Culiat is a
9,200 sqm lot with 266 housing units.

In July last year, Bistekville 9 in Gulod was inaugurated. With this, there are 192 condominiums with a 21-
sqm floor area per unit constructed in the site.

Quezon City is implementing its City Shelter Plan which covers 36 socialized housing projects.
But not all cities are like Quezon City. It has been observed that socialized housing for the urban poor is
not addressed or pursued vigorously at the LGU level. Too little and too late for such an enormous task?

The SHDA presentation states that “the current policy regime is inadequate to address growing housing
deficits.” It lists a host of problems that include the following:

•Government subsidy programs failed to reach intended beneficiaries, particularly those who cannot
afford;
• Private capital left out of the housing program;
• Lack of estate management program;
• Relocation programs may have adversely affected livelihood of the beneficiaries;
• Lack of structure and capability of government to monitor, collect and manage fund.
But again, what’s the current state of socialized housing? Has situation for socialized housing improved?
There are good news and there are bad news. And it is hard to tell, even with the readily available data.

Sources: National Housing Authority Administrative Order No. 9, s. 2011; Housing Industry Roadmap of
Subdivision and Housing Developer’s Association; hlurb.gov.ph; quezoncity.gov.ph; Inquirer Archives

Issues Affecting the Philippine Real Estate Sector this 2018

With the new laws and international economic developments taking place, 2018 is turning out to be an
interesting year for the local real estate sector. Let’s look at the key policies and economic developments
that were put in place this year and their effects on the industry.

Despite various economic turbulence experienced by Filipinos in 2018, most notably the country’s
inflation rate, our real estate sector remains seemingly undisturbed. According to Colliers, “Amid the
slower growth, the property sector remains resilient with major segments such as office, residential and
leisure poised for record-high demand and supply in 2018.”
Here are the factors contributing to this:

TRAIN Law

The Tax Reform Acceleration and Inclusion (TRAIN) Law took effect in January 2018, which had significant
effects on the real estate sector.

For one, Estate Tax is now at a standard rate of 6 percent; prior to the TRAIN Law, it ranged from 5 to 20
percent, depending on the value of the property. Moreover, properties valued at P10 million and below
are now exempted from paying Estate Tax.

The Donor’s Tax has also been pegged at 6 percent. Previous rates were at 15 percent of property value
(if the property is donated to immediate family members) and 30 percent of property value (if the
property is donated to strangers).

On the flipside, brand new properties valued at P1.5 million and higher (for vacant lots) and P2.5 million
(for house and lots and condominium units) are now subject to Value Added Tax. Previous thresholds
were at P1.9 million and P3.2 million, respectively.

Bigger demand for co-working spaces

According to a BusinessWorld report, there are 1.3 million freelancers in the Philippines as of March
2018, and the figure continues to grow. This market will be looking for workspaces designed with
connectivity and flexibility in mind, presenting a challenge to property developers and businesses in this
particular niche to fill the gap.

Rising interest rates and the weakening peso

When inflation rates are high, the Central Bank attempts to manage its effects by increasing interest
rates. Higher interest rates make it more expensive to borrow money, which reduces the amount of
money circulating in the market. This, in turn, will eventually slow down the rise in prices.
While increasing interest rates may prompt real estate developers to increase mortgage rates and
discourage potential buyers, fund managers are confident that banks could not raise mortgage rates
immediately and in full because the market is very competitive.

The weakening peso, on the other hand, is giving foreigners and overseas-based Filipinos the financial
power to invest in real estate. In fact, home reservations jumped 23 percent to P215 billion ($4 billion) in
the first half of 2018 for the nation’s six biggest developers, according to data from AP Securities.

Build, Build, Build Program

Over the next decade, the Philippine government will be spending an estimated $180 billion on
infrastructure projects, which will be comprised of six airports, nine railways, three rapid bus transits, 32
roads and bridges, and four seaports. The ambitious move is seen to encourage countryside investments,
facilitate the efficient movement of people and goods, and create more jobs – all good news for the real
estate sector.

Warmer ties with Asian neighbors

As the Philippines strengthens its diplomatic ties with countries such as China and Japan, the country is
expecting an influx of international visitors and joint partnerships in real estate developments all over the
country.

“We see greater potential for partnership with foreign developers as Colliers Philippines has observed
more inquiries from firms based in Hong Kong, Japan, and mainland China,” Colliers said.

All in all, these issues are more of challenges for our real estate players to branch out and work double
time to cater to market demands and create a level playing field for developers to take advantage of the
massive opportunities that are in store for them. At the end of the day, all these efforts will ultimately
contribute to a more robust local industry that will contribute to the country’s economic growth and
sustainability.

SOURCE: https://www.lamudi.com.ph/journal/issues-affecting-the-philippine-real-estate-sector-this-
2018/
The Philippine Housing Plan Is an Epic Failure

by PROFESSOR ENRIQUE SORIANO

In a CNN report written by Paolo Taruc on September 21, 2015, the Philippines emerged as one of
Southeast Asia’s fastest growing economies with an average gross domestic product (GDP) growth rate of
6.2% per year from 2010 to 2014. The figure represents the highest growth in nearly four decades,
according to the National Economic and Development Authority (NEDA).

Former NEDA chief Arsenio Balisacan believes that the country’s economic gains have been a boon to the
property sector. “The shape of real estate industry in the Philippines has changed dramatically over the
years. In particular, the property market has grown robustly over the last 20 years as increasing demand
for residential and commercial properties in the country became ever more evident against the backdrop
of our changing economic landscape,” he said in a speech last July 28, 2015 during the summit organized
by the Land Registration Authority (LRA) and The Organization of Property Stakeholders, Inc.

“While the property industry has already been doing very well in the past few years… the sector is seen to
grow even more robustly, driven by the continued positive outlook on the economy and the projected
expansion of outsourcing industry within the next five years,” he added.

Metro Manila has more than 3 Million Informal Settlers

However, behind a robust property canvass, it is time to paint a different picture. In a 2010 report, Metro
Manila was already home to 2.8 million informal settlers…that’s 556,526 families living in improvised
housing communities commonly referred to as shanty towns and often lacks property sanitation, safe
water supply, electricity and other basic human necessities.

With very limited opportunity for livelihood, heightened military conflict and unabated poverty continue
to wreak havoc in the countryside, it is estimated that around 200,000 annually troop to the National
Capital Region hoping for a better life and preferring to be tag as informal settlers rather than risked
being impoverished in their hometowns.

The National Urban Development and Housing Framework (NUDHF) 2009- 2016 finds the housing
problem to be serious and is a largely urban phenomenon. The magnitude of housing need, defined as
the housing backlog plus new households, is enormous and is estimated to reach about 5.8 million
housing units. That is the official figure.

My unofficial estimate having been actively monitoring the sector for close to 29 years is roughly hovering
between 7 to 8 Million backlog.
And the gap is widening. Annually it is estimated that close to 500,000 new homes are needed to address
the current housing need. Homebuilders can only supply anywhere from 20% to 22% of the unmet need.

CREBA, in its recent National Convention in Baguio City where I moderated the proceedings cites very
disturbing figures and I quote its President Charlie Gorayeb:

“The 5.5 million housing backlog is too huge to be ignored. It threatens to balloon to even bigger
proportions if supply and access continue to fail to cope with the consistent rise in demand as a result of
population increase, rapid urban migration, and affordability gaps, and other factors. The nagging
housing problem transcends many other facets of the nation’s over-all economic and social development.

Overcoming this condition will require the application of innovative government approaches coupled with
creative strategies by the private sector. “

Housing and Urban Development Council’s Housing Sector: Accomplishment Report?

HUDC’s Report for the period July 2010 to December 2015 showed that the housing agencies provided
housing assistance to 894,569 families valued at P313.607 billion. The assistance includes the provision
or funding of house and lot packages, developed lots, houses, or home materials for home
improvement/repair.

In addition to the direct housing assistance provided by the key shelter agencies (National Housing
Authority, Social Housing Finance Corp. and Home Development Mutual Fund) the Home Guaranty
Corporation (HGC) guaranteed P222.026 billion worth of housing loans extended by private commercial
and rural banks as well as other financing companies equivalent to about 127,500 housing units.

But are these numbers enough? Does HUDCC have the power to effect real change?

CREBA’s 30 Year Old Housing Advocacy: Is the Government Listening?

A Roof Over Every Filipino employing its five-point agenda, CREBA believes, is the most effective, doable
and strong package of reforms that works to the benefit of government, the home buying public and the
private sector.

It is so designed to bring about permanent and far-reaching solutions to our current and future housing
problems as opposed to palliative roadmaps which address only the peripheries of the housing situation
but not its core.

Yet, the housing sector continues to suffer heavily from administrative, structural and regulatory delays
under various levels of government, from the national agencies down to the barangays. Five Presidents
and this advocacy still remains a pipe dream.
HLURB LICENSE TO SELL ISSUED FOR RESIDENTIAL PROJECTS IN UNITS (2001-2014): A Glaring Imbalance

HOUSING PACKAGES TOTAL UNITS %

Socialized 616,123 32%

Economic 687,377 36%

Mid-Cost & Open Market 619,347 32%

TOTAL 1,922,847 100%

Source: Housing and Land Use Regulatory Board (HLURB)

From 2001 to 2014, the HLURB issued Licenses to Sell to less than 2 million housing units, covering all
housing segments, from socialized up to the open market group. This performance rate, averaging about
130,000 housing units per year, is hardly enough to bridge the widening housing demand and supply gap.

Despite all these, however, homelessness, unauthorized housing and lack of decent housing remain to be
a major headache.

Why? What has been the problem? Where, how and why did the programs fail?

The Philippine Housing problem has become a social malaise, a clear injustice to those who have less in
life. Without a roof over one’s head, it strips a person naked and robs him of his dignity to a decent life.

If we continue to ignore this boiling point, Metro Manila will have “shadow” cities comprising millions of
informal settlers soon. It is now a race against time. (esoriano@wongadvisory.com)