Housing sector

Housing sector takes steps to deal with rising cost of construction inputs

As building material prices continue to rise, the Subdivision and Housing Developers Association (SHDA) said it is meeting with major suppliers and producers of building materials and other inputs to help cushion the impact of the price spike.

The rise in wholesale building material prices in Metro Manila neared the double digit mark in May due to higher fuel and lubricant prices, according to the Philippine Statistics Authority. (Full story here: https://businessmirror.com.ph/2022/06/28/wholesale-price-hike-of-ncr-construction-materials-blamed-on-costlier-oil-products/)

Efforts to encourage developers to build more budget homes, despite the surge in building materials, include the recent increase in the price cap for such homes to 2.5 million pesos. The price cap increase has been approved by the Department of Human Settlements and Urban Development (DHSUD) and the National Economic Development Authority (Neda).

“The housing industry is similarly affected by increases in the prices of all production inputs; but due to price controls, much production at the socialized level was unprofitable and production was discouraged. This is why the adjustment of the price ceiling, due a few years ago, is necessary to encourage the production of housing for our compatriots, SHDA President George Siy told BusinessMirror.

“SHDA has also met with major suppliers and producers of construction materials and other production inputs to make special arrangements for bulk purchasing, product bundling and other arrangements to facilitate price increases. of these materials and to ensure stable access and supply,” he added.

Siy said the input costs for producing housing units have all gone up. This includes land, labor, building materials and business cost and delays in price adjustments have discouraged production.

But, he explained that adjustments to the housing price cap will have a positive impact on housing, as more houses can be developed.

DHSUD and Neda recently signed the joint approval on adjusting the ceiling price of budget housing from 1.7 million pesos to 2.5 million pesos.

The resolution states that for projects with existing sales licenses, the new price cap will be applied to unbuilt economy homes, while unsold units must maintain the old price cap.

“The economic incentives and more attractive homes built as a result of the adjustments will certainly encourage more construction, as well as greater market reach,” Siy said.

He also hopes that efforts to simplify rules and regulations in the authorization and licensing process; the creation of one-stop processing centres; and the digitization and computerization of transactions with public administrations continue to make housing more affordable for all.

Siy said that with the current ecosystem of permits and licensing processes in the housing sector, developers have to deal with 27 offices, 78 permits to overcome, 146 signatures to respect and a total of 373 documents to produce.

Nonetheless, he said, bureaucracy and delays have been reduced with the help of DHSUD and the Anti-Red Tape Authority (ARTA).

“We continue to monitor and provide feedback to government in this regard, particularly the development experiences at regional levels and in their dealings with other government agencies as well. Many improvements are still being discussed,” said Siy.

Apart from this, he said there is a need for more access to sustainable funds for housing which will also affect private sector participation. He added that housing activities are also influenced by regulations and incentives given to stakeholders, as well as costs.

These include the provisions of Republic Act 7279 – also known as the Urban Development and Housing Act of 1992 – on incentives for private developers and the corresponding recognition of adjustment levels by the Investment Council of the Ministry of Trade and Industry.

Siy said others on the list are the inclusion of housing initiatives in the Priority Investment Strategic Plan and the inclusion of these incentives in DHSUD’s housing development plan.