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Updated: February 20, 2015

5.5 million housing backlog problem can be solved with P220 billion

The Philippines has a tremendous housing backlog of 5.5 million and to solve it CREBA has proposed a 5-point solution that involves amendments of housing bills and P220 billion

Despite the rapid growth of the real estate development sector in the Philippines, we are still faced with a tremendous housing backlog problem of 5.5 million units. In fact, the backlog is feared to reach an estimated 6.5 million by the year 2030. With a backlog this large and grouped with a fast-growing population and a capital that is as crowded as ever, the task of coming up with enough housing units to close the gap effectively is daunting.

However, CREBA (Chamber of Real Estate and Builders’ Association Inc.) recently proposed a 5-point solution in order to effectively lessen the gap in years to come. Yet the association believes that the proposal must be acted upon immediately. Charlie Gorayeb, the association’s chairman, stressed the importance of prioritizing the housing problem and stated that “The 5.5 million housing backlog is too huge to be ignored.”

The 5-point solution mainly involves amendments of certain laws, creation of local and national housing boards, and tapping an existing P220 billion fund. The points are enumerated and explained below:

1. Long-term and affordable funds for socialized and economic housing
CREBA reports that there is an untapped P220 billion which is supposed to be allocated for the development of socialized and economic housing. The funds are composed by allocations coming from SSS (P25 billion), GSIS (P25 billion), PAG-IBIG (P70 billion), and unused agri-agra funds of banks (P100 billion). This P220 billion should be used for implementing an effective housing program.

In addition to putting the P220 billion to good use, CREBA proposes to establish an SMI (Secondary Mortgage Institution) which will “serve as the springboard for the operation of long-term mortgage-backed securization program.

2. Affordable Homes for Employees in Urban Areas
CREBA proposes to amend the Urban Development and Housing Act of 1992. Their amendments include the reduction of socialized housing compliance quotas from 20% to 15% (for Subdivisions) and 5% of net saleable residential area instead of 20% gross area or cost (for Condominiums). CREBA then introduced a housing package for socialized medium rise condominiums which must be located in urban areas in order to avoid dislocation of urban workers.

CREBA also wants to eliminate unnecessary bureaucratic procedures such as having to get a BIR ruling from the national office for every developer project to speed up socialized housing developments.

3. Lands for Residential, Commercial, and Industrial Development
CREBA reports that allegations against developers of indiscriminately converting agriculture land are false. Their research showed that built-up land only makes for less than 3% of the total land area in the country. While agricultural lands take up more than 50% of the total land area in the country. That being said, CREBA supports the National Land Use Act but proposes that lands set aside for non-agricultural development are exempted from provisions of conversion ban or restrictions and/or redistributions under CARP (Comprehensive Agrarian Reform Program).

4. Efficient Local Government Housing Regulations
CREBA proposes a bill which mandates cities and municipalities to create a local housing board to effectively handle housing-related functions, such as issuing preliminary and/or final development permits. Much like reducing red tape, the move will make gathering permits and developing more streamlined, leading to faster and easier building of housing developments.

5. Full-fledged Housing and Urban Development Department
Finally, CREBA believes that an integrated government department dedicated to housing and urban development is needed to ensure that a holistic and well-planned and sustainable housing program is formed and that the program will be executed effectively. CREBA calls that the integrated system will bring together components of the following:  NHA (National Housing Authority), NHMFC (National Home Mortgage Finance Corporation), SHFC ( Social housing Finance Corporation),  HLURB (Housing and Land Use Regulatory Board), HGC (Home Guaranty Corporation), and HDMF (Home Development Mutual Fund).

The proposed agenda is said to be CREBA’s top priority for the year of 2015. According to Gorayeb, the five-point agenda “is the most effective, doable, and strong package of reforms that works to the benefit of the government, the home buying public, and the private sector.”

But CREBA is not alone in the fight to close the gap of 5.5 million. Last year the SHDA (Subdivision and Housing Developers), announced their target of building 1 million homes by 2016. Separately, real estate analysts have taken notice of other real estate developers turning their attention to building low- to medium-cost homes as well. One of Pinnacle Real Estate’s Market Insight in 2014 reports that top real estate developers are focusing on building units for the low- to mid-income market. “More attention is now given to the affordable and socialized segments. Big players have been active in building in this segment, instead of partnering with smaller players to comply with the 20%- socialized housing component as required by the Urban Development and Housing Act,” the report said.

There have also been real estate developers that have been targeting low- and medium-income earners, such as Fiesta Communities, AXEIA, and Profriends.

Many of these socialized and economic housing developments are currently found at the fringes of central business districts, or in provinces and developing regions in the country. For instance, you can find homes with low prices in Cavite, Laguna, Angeles, and Bulacan. 

Indeed, all of these steps by real estate developers are timely. Yet they should be fully implemented quickly and efficiently if we are to lessen the backlog. If most developers were aggressive in building luxury condominiums, they too, should be as aggressive in providing homes for the average working Filipino. A large concerted effort among real estate developers, as well as the government, is needed to bridge the 5.5 million gap and prevent it from ballooning again.

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