Bernardo M. Villegas
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Build, Build, Build In Housing (Part 1)

          The golden age of infrastructure during the Duterte Administration is illustrated by a catchy slogan, Build, Build, Build.  There should be an equivalent political will to apply the same slogan to the housing sector, especially for the low-income households.  In meeting the housing needs of the population, there is no question that the private sector should take the lead.  Fortunately, there is a very proactive private organization, the Subdivision and Housing Developers Association, Inc. (SHDA) that is taking the lead in addressing the housing backlog, especially at the socialized (costing Php450,000 and below); economic (above Ph450,00 to Php1.25 million and low cost (Php1.25 to Php 3 million) sectors.  There is no back log at medium cost (above Php 3 million to Php 4 million) and open market (above Php 4 million) sectors. In fact, there is already an oversupply of the high-priced housing units.  Fortunately, most of these units catering to the wealthy are not bought on credit.  There is no danger of a bubble in case the buyers realize that they cannot rent out the units they have purchased.  They will just keep them and wait for the next upturn in demand.

         In support of the objective of Philippine society to attain inclusive economic growth, the SHDA has adopted for its mission the following statement:  “Every Filipino family has the right to live with dignity in the comfort of one’s own home regardless of economic status.  With full government support, we, the housing industry, envision to eliminate the housing backlog by year 2030.”  In a document that appeared just four months after President Duterte was sworn into office on June 30, 2016, SHDA and the Center for Research and Communication Foundation, Inc. presented a roadmap that purports to eliminate the housing backlog by the year 2030.  To attain this vision, there must be very close collaboration between the Government, the business sector and civil society, especially as regards addressing the acute problem of squatters or the informal housing sector.

         As reported in the Housing Roadmap, the housing backlog as of 2012 stood at 3.9 million housing units, including those 832,000 families who cannot afford to pay for the amortization of any housing unit, no matter how much the subsidy.    The deficits are in the economic segment at almost 1.96 million units, followed by socialized and low cost housing at 663,282 units and 462,160 units, respectively.  The study showed that additional housing production data from the non-governmental organizations (NGOs) and the government housing agencies will not be enough to fill up the deficit in these segments.  Based on information gathered, NGOs like Habitat, which started in 1998, built 43,160 housing units; Gawad Kalinga (GK) since 2000 built close to 70,000 units.  NHA from 2004 to 2012 produced 274,699 units and Socialized Housing Finance Corporation (SHFC) from 1989 to 2012 contributed 144,163 housing units.  Since no recent updates have been made public from SHFC and NHA, the estimated annualized production from the NGOs and the government is 787,475 units—far from adequate to cover the backlog of 3.9 million households in 2014. 

         The Roadmap estimates that in 2030 housing need will be at 10.1 million units.  Given the projected production capacity during this period of about 200,000 units, the backlog is likely to balloon close to 6.3 million households in the socialized (1.6 million), economic (2.6 million) and low cost segments (0.6 million), including the households that will not be able to qualify for financing the purchase of their housing units (1.5 million).  To address this backlog, the Housing Industry Roadmap of the Philippines from 2012 to 2030, the following are the obvious solutions:

         --Increasing housing production;

         --Enhancing shelter affordability through a comprehensive housing subsidy program for targeted beneficiaries.

         --Mobilizing and generating housing finance for end-user financing support; and

         --Improving the regulatory environment for housing. 

         Production-wise, the Roadmap estimates that there will have to be a 12% annual volume growth of housing units or an average of 346,000 housing units per year to wipe out the expected deficit.  As regards affordability, a comprehensive government-sponsored housing subsidy for targeted segments involving the relevant government agencies as strategic partners have to be implemented.  Policy-wise, improvements in the regulatory environment for housing, such as timely processing of permits, certifications, and licenses (very much a focus of the Duterte Administration); resolving conflicts between local and national housing policies and guidelines; as well as enhanced representation of the housing industry in policy-making.  As for the financing program, funds for end-user financing will have to be generated and mobilized.  A positive note here is that the Tax Reform Package of the Duterte Administration is expected to increase disposable income of those earning annual incomes of Php200,000 to Php 3,000,000 annually, the income segments to which belong those households in the market for socialized, economic and low cost housing in which the biggest housing deficits are expected.  The improved incomes will encourage the production of these housing units.  In fact the CRC-SHDA study showed that the oversupply of housing units is in the medium-cost and open market segments.  (To be continued).