I recently said that schizophrenia has been afflicting property bulls. Yet more signs of trouble for them.
Despite the constant push to project a perpetual property boom and despite the massive BSP 4Q 2015 and 1Q 2016 stimulus, the Philippine property sector may have fallen into a state of exhaustion. Such comes mostly from the race to build supply and possibly also from potential demand site pullbacks (out of pricing and affordability issues)
Well the central bank of central bank, the Bank for International Settlements just released 1Q property price data for the world which includes the Philippines
Wow. Growth rates in Philippine real estate prices have sunk to merely 2.88% nominal in 1Q and 1.73% real!
Real estate Makati commercial and residential prices have been in descend since its peak in 2013 (coincidental with the 10 months of 30%+++ money supply growth)!
Growth rates have essentially retrenched to 2010 levels—the inception of the BSP fueled boom! Growth rates seem as approaching NEGATIVE zone!
What’s more interesting has been of the developing sharp divergence between Makati land prices which boomed 17.34% over the same period, as against condo commercial and residential prices which rates dipped to again a mere 2.88%
At the background has been the 1q boom in bank credit conditions which was manifested via M3. This means bank credit has most likely financed Makati land speculation, most likely from developers racing to build up land inventory for future development.
The divergence implies of the softening demand by consumers in the face of developer’s constant race to build supply—the mismatch of which appears to be burgeoning!
As time flies, cracks seem to be getting bigger and bigger!
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