Where do we go from acknowledging the importance of a home? As the number one marketplace for all things real estate, Lamudi Philippines talks about affordable housing and how best to make to it available to every Filipino.
“More than just a roof to keep our people safe from external threat, a shelter is where values are formed, hopes and dreams are built, and the true meaning of family is defined. For many of us, a home is indeed a symbol of identity and dignity,” said President Rodrigo Duterte at the 7th National Developers’ Convention of the Organization of Socialized Housing Developers of the Philippines (OSHDP). In the same event, the president called on all economic development stakeholders to unite and formulate development action plans aimed at providing decent homes to Filipinos.
The dream of having a home of their own is one common aspiration shared by all Filipinos but as the rise of property prices continue to shoot up this goal is becoming more and more elusive most especially to low-income earners. To be able to address the housing ownership challenge many Filipino families face, here are some innovative solutions that can be rolled out.
Affordable Finance Schemes
The first step to housing within reach is easier finance schemes and lower interest rates especially for the poor and the marginalized.
In recent financing program of Pag-IBIG Fund, the lowest interest rate they offer to its members is 5.5% for a one year fixed-pricing period, 6.5% for 3 years, 7.270% for 5 years, 8.035% for 10 years, 8.585% for 15 years, 8.8% for 20 years, 9.050% for 25 years, and 10% under a 30-year fixed-pricing period. To avail of the lowest rate of 5.5% per annum, borrowers must have a monthly amortization that should not exceed 30% of the borrower’s gross monthly income; and the ratio of the loan amount to the appraised value of the collateral shall not exceed 75%.
One major worry though is the full risk-based pricing framework that the Fund has recently adopted. This means that the interest rates will only be fixed on the assigned period and might go higher or lower depending upon the prevailing market rates. Fortunately the shelter agency reported that since they used the new scheme, the agency has lowered its rate for five consecutive times. This rule applies to all eligible members of the Fund.
In a study of the Housing and Urban Development Coordinating Council (HUDCC), the affordability of housing has been adversely affected by out-of-control urbanization and unplanned urban sprawl where demand for residential land far outstrips the available supply of land, particularly in densely populated areas.
The best course of action for this dilemma can start with more proactive engagement of private investors in the national agenda. With the government and the private sector sharing ideas and working together, planning for future developments of a city that will include more low-cost housing will be made much easier.
The only listed example of public and private cooperation under property development in the portal of the Public–Private Partnership Center of the Philippines is the Pabahay sa Riles Project which can be recalled as not exactly a success.
As upcoming projects such as the Cavite–Laguna Expressway and the NLEX–SLEX Connector Road has been proven to be helpful, we can only hope that joint venture real estate developments will soon be planned and conceptualized for Filipinos.
Lower Rental Costs
Taking a leaf from the plans of former HUDCC chief Leni Robredo, a public rental housing program can likewise help ease the financial burden of housing to salaried workers and employees. This initiative will help individuals and families who temporarily chose to reside near their workplace in the city but do not intend to acquire a home there. By providing value-for-money ready-for-lease units, the families can save up for that dream house that they can own in the future.
According to a study conducted by the Philippine Institute for Development Studies (PIDS) in 2004, 33% and 17% of the Philippines’ urban population are renters and sharers, respectively. Through helping this big chunk of the market, this might be the way to not only help future homeowners save but also address the issue of informal settlements in key urban areas.