Housing developers seek review of price cap on socialized units

The housing and urban development agency has raised standards to make cheap units μ‘liveable.’

Low-end housing developers are appealing to the state-run Housing and Urban Development Coordinating Council (HUDCC) to review and reconsider the new price ceilings for socialized housing it recently adopted.

The Organization of Socialized and Economic Housing Developers of the Philippines claimed that the HUDCC was not able to factor in the costs of inflation, interest rate adjustment, rise in prices due to Train Law, and the increase in minimum floor area of units in the new price ceiling intended for the low-income market.

HUDCC recently raised the minimum standard requirement for socialized housing projects to make it more livable.

From a price ceiling of P450,000 for an 18-square-meter (sq.m) floor area in the last four years, HUDCC changed it to 24-sq.m floor area at P480,000.

In an interview, OSHDP president Marcelino Mendoza said the group is opposing the new measure, saying this would hurt the production on affordable housing amid factors such as the rising cost of construction, among others.

He stressed that the agency has failed to look into other important factors that may affect the delivery of socialized housing in the country.

Mendoza said that while the is aim to give Filipinos a livable house, the measure may discourage developers from serving this market because of its unprofitability, further widening the gap in addressing the housing backlog.

OSHDP pointed out that based on the construction material wholesale price index and the consumer price index--determined by the Philippine Statistics Authority (PSA) from December 2013 to April 2018--the price of socialized housing should have been raised by either 16 percent or 13 percent.

“However, the newly-adjusted price ceiling of P480,000 for horizontal housing, with a minimum floor area of 24 sqm., even decreases the cost per square meter down to P20,000, even twenty percent lower, than the price ceiling set in 2013, or almost five years since the last ceiling was adjusted,” the group argued.

It added that the new price ceiling of P480,00 (from P450,000) on a 24-sqm-house is 29.21 percent and 31.02 percent lower than the price ceiling adjusted for 2018 inflation, based on the Construction Materials Price Index, and the Consumer Price Index.

“Unless the price ceilings are reconsidered, it will hurt and considerably slow down the collective housing production momentum,” the OSHDP said.

Mendoza pointed out that the socialized housing sector is facing a number of challenges.

It appealed to the Housing Land Use and Regulatory Board (HLURB) to make initiatives to reverse the downward trend in socialized housing.

The latest report from the PSA StatDev 2017 revealed that “all indicators under the shelter and housing sector showed low likelihoods of achieving their respective targets at the point of the medium term.” It also disclosed that building and construction of residential units are down by 12 percent compared to the same period last year.

“We don’t see this trend reversing in 2018 and by our projection, it is still set to continue in the next three years if no major action is taken,” the OSHDP said.

The country’s housing backlog is somewhere between 168,000 and 190,000 units a year. By 2021, housing need is projected to be around 6.7 million.