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Meeting the backlog in housing

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 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 (P450,000 and below), economic (above P450,000 to P1.25 million) and low-cost (P1.25 million to P3 million) sectors.

There is no backlog in the medium-cost (above P3 million to P4 million) and open-market (above P4 million) sectors. In fact, there is an oversupply of high-priced housing units.

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In support of the objective of attaining inclusive economic growth, the SHDA has adopted this mission statement: “Every Filipino family has the right to live with dignity in the comfort of one’s own home regardless of economic status.” It is committed to eliminate the housing backlog by 2030, “with full government support.”

In a document issued just four months after President Duterte was sworn into office, the SHDA and the Center for Research and Communication Foundation Inc. presented a roadmap to that goal. To attain this vision, there must be very close collaboration between the government, the business sector and civil society, especially in addressing the acute problem of squatters, or the informal housing sector.

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As reported in the Housing Industry Roadmap of the Philippines, the housing backlog as of 2012 stood at 3.9 million housing units; as many as 832,000 families who cannot afford to pay amortization for any unit, no matter how much the subsidy. The deficits are in the economic (almost 1.96 million units), socialized (663,282 units) and low-cost (462,160 units) sectors.

It is estimated in the roadmap that in 2030, the 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 to almost 6.3 million households in the socialized (1.6 million), economic (2.6 million) and low-cost (0.6 million) segments, including the households that will not be able to qualify for financing the purchase of housing units (1.5 million).

The roadmap recommended the following 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’s estimate is that there will have to be a 12-percent annual volume growth of housing units, or an average of 346,000 units per year to wipe out the expected deficit. In terms of affordability, a comprehensive government-sponsored housing subsidy for targeted segments involving relevant government agencies as strategic partners has 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), resolution of conflicts between local and national housing policies and guidelines, as well as enhanced representation of the housing industry in policymaking are necessary. 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 the disposable income of those earning P200,000 to P3,000,000 annually—the income segments to which belong those households in the market for socialized, economic and low-cost housing in which the biggest deficits are expected. The improved incomes will encourage the production of these housing units.

Bernardo M. Villegas (bernardo.villegas @uap.asia) is senior vice president of the University of Asia and the Pacific.

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