Housing sector moves to address rising cost of construction inputs
AS construction material prices continue to increase, the Subdivision and Housing Developers Association (SHDA) said it is meeting with major suppliers and producers of construction materials and other inputs to help cushion the impact of soaring prices.
The increase in the prices of wholesale construction materials in Metro Manila approached the double-digit mark in May due to more expensive fuels and lubricants, according to the Philippine Statistics Authority. (Full storyhere:https://businessmirror. com.ph/2022/06/28/wholesaleprice-hike-of-ncr-constructionmaterials-blamed-on-costlier-oilproducts/)
Efforts to encourage developers to build more economic housing units, despite the spike in construction materials, include the recent increase in the price ceiling for these housing units to P2.5 million. The hike in the price ceiling was green-lighted by the Department of Human Settlements and Urban Development (DHSUD) and the National Economic and Development Authority (Neda).
“The housing industry is, likewise, affected by the increases in prices of all inputs to production; but due to price controls, much of production in socialized level has been unprofitable and production has been discouraged. This is why the price-ceiling adjustment, due some years ago, is needed to encourage housing production for our countrymen,” SHDA Chairman George Siy told the Businessmirror.
“SHDA has also been meeting with major suppliers and producers of construction materials and other inputs to production to make special arrangements for bulk purchase, bundling of products and other arrangements to ease up the increase in pricing of these materials and ensure steady access and supply,” he added.
Siy said the costs of inputs to production of housing units have all increased. This includes land, labor, construction materials and the cost of doing business and the delays in adjustments of prices have discouraged production.
But, he explained that the adjustments in the price ceiling for housing will have positive repercussions for housing as more homes can be developed.
The DHSUD and Neda recently signed the joint approval on the adjustment of the price ceiling for economic housing from P1.7 million to P2.5 million.
The resolution states that for the projects with existing licenses to sell, the new price ceiling will be applied to unconstructed economic housing units, while unsold units have to sustain the old price ceiling.
“The economic incentives and more attractive homes built that follow the adjustments will definitely encourage more construction, as well as a wider market reach,” Siy said.
He also hopes that efforts to simplify rules and regulation in the permitting and licensing process; the establishment of one stop processing centers; and the digitization and computerization in the transactions with government offices continue to make housing more affordable for all.
Siy said with the current ecosystem in housing sector permit and licensing processes, developers have to contend with 27 offices, 78 permits to surmount, 146 signatures to comply with and a total of 373 documents to produce.
Nonetheless, he said, the red tape and time frames have been reduced with the help of the DHSUD and the Anti-red Tape Authority (ARTA).
“We continue to monitor and provide feedback to the government in this regard, especially the experiences of the development at the regional levels and in their transactions with the other government agencies as well. Many improvements are still being discussed,” Siy said.
Apart from these, he said there is a need to gain more access to sustainable funds for housing which will also affect private sector participation. He added that housing activities are also influenced by regulations and incentives extended to stakeholders, as well as costs.
These include provisions of Republic Act 7279—or also known as Urban Development and Housing Act of 1992—on incentives for private developers and the corresponding recognition of adjustment levels by the Board of Investments of the Department of Trade and Industry.
Siy said others on the list are the inclusion of housing initiatives in the Strategic investment priority plan and the inclusion of these incentives in the Dhsud’ s housing development plan.