Published on September 27, 2013, Business Mirror Online:

Written by Cai U. Ordinario

The Philippines’s housing deficit is seen to worsen in the coming years because of numerous roadblocks that are hindering the growth of the real-estate industry, particularly in the areas of incentives and government regulations.

The Subdivision and Housing Developers Association (SHDA) said the backlog could balloon to as much as 7 million units by 2030 if efforts to improve the processes prove to be insufficient and the lack of building incentives continues.

In a statement issued at the SHDA National Convention on Thursday in Makati City, the association said that, currently, the national housing backlog is at 3.9 million units.

The SHDA said many roadblocks prevent their members from increasing housing production. These include uncertainty in tax holidays for mass housing, inaccessibility of government housing financing for lower and mid-income segments, conflicting land-use policies and issues on land-title processing.

“All these roadblocks add to cost and drag in housing production, which ultimately translate to higher selling prices. The housing starts, although passable, would certainly be better if these roadblocks were finally addressed. Only then will we see significant reductions in the housing backlog,” SHDA President Paul Tanchi said.

The SHDA said single-detached units have the most number of units built. But the construction of single-detached units slowed in 2012, with a growth of only 34 percent from 40 percent the previous year.

Condominium development, on the other hand, grew by 36.75 percent, or an increase of 18,568 units in 2012.

National Economic and Development Authority (Neda) Deputy Director General Rolando Tungpalan told reporters at the sidelines of the SHDA event that in the incentives aspect, this must go through a review process.

Tungpalan said this review process of incentives is a necessary step to avoid redundancies. These can occur, especially in the case of fiscal incentives, which is part of what the SHDA is asking.

In the meantime, Tungpalan said there are many non-fiscal incentives that could be explored. These include the use of public lands that can be used for housing projects, which can bring down the cost of these developments.

The Neda official said the government has already instituted a direct-budget provision for housing. Under this scheme, housing agencies like the National Housing Authority (NHA) can bid out housing projects that involve the construction of thousands of units.

These can include socialized housing units that have a ceiling price of P400,000, as well as low-cost housing projects that cost P400,000 to around P2 million to P3 million.

“[Under the] direct budget, you just give the NHA this money, let’s say [to construct] 100,000 units or 20,000 units, then they can start bidding this out. Developers can make decent profits on that. Our housing program is up to low-cost [housing],” Tungpalan said.

The government cannot solve the housing backlog alone; the private sector must also be involved, Tungpalan said. The government is asking the private-housing sector to also think of ways to use new technology to bring down building costs, he added.

He said this was why the government was also pushing for the review of Batas Pambansa 220 and Presidential Decree 957, or the implementing rules, for the inclusion of green-technology housing.

Data from the National Statistics Office showed that there were a total of 29,424 construction projects in the second quarter of 2013. The majority of these projects were for residential-building construction, which reached 21,360, or 72.6 percent of the total new construction projects.

The total value of construction from approved building permits for residential buildings was estimated at P32.6 billion, with a total floor area of 3.3 million square meters, translating to an average cost of P9,754 per square meter.