Is the ‘Pabahay’ target of one million houses a year realistic?
The Pambansang Pabahay Para sa Pilipino (4PH) Program aims to service the housing needs of underserved low income Filipino families, currently estimated at a backlog of 6.5 million units, by targeting a million housing units built every year for the next six years. The program’s implementation will rely mainly on local government units (LGUs) acting as project proponents, supported by the key shelter agencies that include the Pag-Ibig Fund, the National Housing Authority, the Social Housing Finance Corp., and the National Home Mortgage Finance Corp. The mortgage funds shall be provided by government financial institutions and private banks to ensure that the main issue of affordability and access to funds are properly addressed.
The 4PH program also aims to achieve zero informal settler families (ISFs) by 2028, which means no more families living in slum areas. This further means that a substantial number of units will have to be allocated to ISFs within the six-year program implementation period. Under the 4PH project concept, LGUs shall be responsible for preparing the parameters of their proposed housing projects, in accordance with existing government prescribed laws and standards, and subject to the Department of Human Settlements and Urban Development’s (DHSUD) design and price ceiling guidelines. Since the main focus is to build in-city, multilevel condominium structures, the typical selling price is estimated at an average of P1 million per unit. Assuming a 100-percent loan to value ratio, the mortgage funding per unit will require a total budget of P1 billion to finance a batch of 1,000 units. Therefore, one million units per year will require a mortgage funding budget of P1 trillion, or a total of P6 trillion for six years. And this does not include the additional budget needed for the government to support the proposed interest subsidy scheme to make monthly amortizations more affordable.
There is no doubt that every well-meaning Filipino is very much concerned with the plight of underprivileged homeless families, particularly those who are forced to live in squalor at disaster-prone informal settlements. And that they fully support the government’s ambitious goal to eliminate the housing backlog in the shortest time possible. However, there is a need to make sure that the promise can be delivered. And that will require much more than a bold schematic plan.
Assuming that Pag-Ibig Fund will maintain its current funding capacity for housing loans at P100 billion per year for the 4PH program, at an average loan value of P1 million per housing unit, this would mean funding for only 100,000 units per year. For the six-year program implementation, a P600-billion fund will provide housing loans for only 600,000 housing units. The question is: In addition to Pag-Ibig Fund’s P100 billion per year funding capacity, will the other key shelter agencies, government financial institutions, and private banks be able to fund the rest of the housing loans required to sustain the production and delivery of one million housing units per year, that will require an additional fund of P900 billion per year or a total of P5.4 trillion for the six-year program implementation?
The other question is: Will the 4PH program be able to build one million housing units per year, when data shows that for the past several years, out of the total projected housing production of 200,000 per year, only an average of 140,000 housing units are actually built for the homeless comprising the 6.5 million housing backlog? The target of one million housing units per year is seven times bigger than the current performance of the whole housing industry.
Concrete answers backed up by firm commitments from the program partners cited must, therefore, be obtained by DHSUD Secretary Jose Rizalino Acuzar to address the foregoing questions. The Development Bank of the Philippines, the Land Bank of the Philippines, and the Bankers Association of the Philippines must now issue public statements of mortgage-funding commitments for the 4PH program to include housing loans to be extended to ISF beneficiaries. Furthermore, the Philippine Guarantee Corp. must also issue a public statement that it is capable and ready to provide housing loan repayment guaranties for the 4PH beneficiaries that will consist of six million accounts. Such firm commitments unequivocally made by the program partners are critical to establish the credibility of the 4PH program under the administration of President Marcos Jr.
Jose S. de Guzman,
Forte Realty Corp.
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