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)