US recession will not affect Philippine real estate
By Lauren on Feb 5, 2008 in Real Estate News
Construction tycoon Reghis Romero II says that a possible US recession due to their housing crisis will not have any negative effects on Philippine real estate. This is due to the fact that the Philippines has a very strict loan to collateral ratio for housing loans. Besides that, Philippine banks do not make use of the same mortgage system as the US, which is rising steadily in home foreclosures.
To prevent any similar real estate crisis in the Philippines, the Chamber of Real Estate and Builders Association (CREBA) implemented a contract-to-sell system instead of a mortgage origination to document sales of house and lot packages. The advantage here is that the buyer won’t have his name on the title until he has paid. If the buyer fails to pay, the contract goes back to the bank, who can use or sell the property.
Another project that will help the local real estate industry are government housing projects like the One Million Homes Program. This aims to address the 20-year housing backlog of 4.5 million houses. For that to happen, at least 500,000 low-cost housing units need to be built per year; however, there are only around 200,000 houses that are built or being built between the years 2005 and 2010.
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