Construction magnate Reghis Romero II yesterday said a possible US recession as a result of its housing market crisis will not likely affect the Philippine real estate industry.
“In the Philippines, the loan to collateral ratio (for housing loans) is very strict so it would not happen, Romero, national president of the Chamber of Real Estate and Builders' Association, who was the guest speaker at the general assembly meeting of CREBA-Negros Chapter in Bacolod, said yesterday.
Romero said Philippine banks also do not use the same mortgages as their US counterparts which experienced sharp rise in home foreclosures.
CREBA has instituted the use of contract-to-sell instead of mortgage origination in documenting installment sales of house-and-lot packages to prevent subprime crisis in the Philippines .
“The advantage of that is the title is not yet under the name of the buyer. If a (homebuyer) fails to pay, then the contract can immediately be reverted back to the bank, and the bank can use or sell it, or securitize it,” Romero said.
Prior to the use of CTS, a deed of sale is issued to a homebuyer even with only 10 to 30 percent downpayment.
Romero said the “pump priming” of the national government through housing projects like the “One Million Homes Program,” aimed to address housing backlog, can also help the real estate industry.
“We have projects that will spur development in the housing sector. CREBA will take the lead in supporting this program, for the Filipinos not to experience the impending American recession,” he said.
HOUSING BACKLOG
Romero said the Philippines has a housing backlog of 4.5 million within 20 years thus, a production rate of at least 500,000 socialized and low-income housing units per year needs to be achieved.
From 2005 to 2010 alone, a total of 200,000 houses per year should have been built, he said.
MODERATE GROWTH
Romero said the country's real estate industry is “in a state of moderate growth and in a process of consolidation from last year, 2007, to 2010.”
“In other words, what we do now or how we fare this year will create an impact on what the industry will become in 2010. This is the time to act, to make the machine grind at a pace higher than it did in the recent past, otherwise, we may lose one good chance,” he added.*NLG
Source: Visayan News Daily (January 25, 2008)
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