LOW-INCOME Filipinos wanting to purchase their own home may find themselves paying more as the national government increases the ceiling cost of socialized housing units.
A Joint Memorandum Circular (JMC) reflecting this was released by the National Economic and Development Authority (Neda) and the Department of Human Settlement and Urban Development (DHSUD) on Monday. The JMC was signed last Thursday, October 19.
The ceilings for socialized housing prices, as well as socialized condominium units, were increased by 46.55 percent and 33.33 percent, respectively. The ceiling cost for socialized housing is now P850,000, and for condominium units, P933,320.
“We do not see the adjustment in the price ceiling as affecting inflation; rather it intends to encourage private developers to supply socialized housing units, given the simplified procedures and some tax perks for such projects,” Neda Undersecretary for Planning and Policy Rosemarie G. Edillon told BusinessMirror on Monday.
Edillon said the adjustment was done to respond to the increase in construction costs since 2018.
Based on the second quarter of 2023, data from the Philippine Statistics Authority (PSA), showed that the average cost of residential and commercial construction increased to P11,344.44 per square meter.
This was an increase of 3.7 percent compared with the average cost of P10,937.69 in the second quarter of 2022, said PSA.
The data showed among residential constructions, residential condominiums posted the highest average cost of P17,396.98 per square meter during the quarter, while other residences recorded the lowest average cost of P6,566.74 per square meter.
Edillon said the adjustment was also done to support the Pambansang Pabahay para sa Pilipino program, which will include a component to make the housing units affordable.
“As we have seen in the past, developers are not keen on socialized housing projects, even with the tax and non-tax incentives. There are many reasons why this is so; one of these is the low price ceiling to qualify,” Edillon told BusinessMirror.
In a statement, the DHSUD said under the adjusted ceiling, socialized subdivision projects now cost no more than P850,000 from the current P580,000 for units with a minimum floor area of 28 square meters with a loft of at least 50 percent of the base structure or 32 sqm, subject to existing rules and regulations.
The September 2018 Memorandum Circular released by the government stated that the 28 sqm is the largest floor area. The memorandum still provided a ceiling for 22 sqm at P480,000 and 24 sqm at P530,000.
Meanwhile, socialized condominium projects are now set at P933,320 for 22sqm; P1,060,591 for 25 sqm; and P1,145,438 for 27 sqm for a four-storey building.
For projects composed of five- to nine-storeys, the pricing is P1 million for 22 sqm; P1.14 million for 25 sqm and P1.23 million for 27 sqm, and for 10 floors above projects, 22 sqm units cost P1.32 million; 25 sqm at P1.5 million; and 27 sqm at P1.62 million.
In 2018, the Memorandum Circular stated that the ceiling price for 22 sqm in Metro Manila and nearby areas is at P700,000 while the 24 sqm is at P750,000.
For other areas, the 2018 rule stated that the 22 sqm is at P600,000 while the ceiling for the 24 sqm is at P650,000.
“With the inclusion of land development cost, socialized condominium projects’ price ceiling is set at maximum P1.8 million,” the DHSUD said about the new JMC.
The DHSUD said the JMC is expected to strengthen the partnership between the government and private sector in housing and real estate development, particularly in socialized housing for minimum wage earners and informal sellers, which could trigger massive economic activities in the sector and about 80 aligned industries.
JMC No. 2023-003 emphasized “…the existing price ceiling for socialized housing no longer responds adequately to prevailing market conditions, including rising development and construction costs, thereby, discouraging the private sector from building affordable houses for low-income and underprivileged families.”
It added, “…to address the housing needs of approximately 6.5 million Filipino households, a two-pronged approach is necessary, which involves encouraging private sector participation in constructing socialized housing units and fully implementing the Pambansang Pabahay para sa Pilipino Program, led by DHSUD in collaboration with its key shelter agencies and local government units.”
Republic Act 11201 or the Department of Human Settlements and Urban Development Act mandates the DHSUD and NEDA to determine the price ceilings for socialized, low cost or economic and middle-income housing.
The law provides that the price ceiling may be reviewed or revised any time, but not more than once every two years.