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Another bill recently passed into law that should help drive conversion of land into socialised housing is the Idle Government-
Owned Lands Disposition Act. The act requires that any government-owned land that has not been used for its originally licensed
purpose within a 10-year period be provisioned to the National Housing Authority (NHA). From there, the NHA, along with the local
government unit, will build socialised housing on their own or in partnership with private developers. In December 2014 the
Department of Interior and Local Government announced that it was providing a seed fund of P335m ($7.53m) to six city
governments in Manila for socialised housing projects relocating informal settler families living in high-risk areas.
LENDING MECHANISMS: CREBA contends that setting aside government-backed funds to guarantee fixed interest rates for
socialised housing mortgages is essential to helping first-time buyers enter the market. It has proposed that 25-year fixed rates of
4.5% be applied to properties that sell for between P450,000 ($10,125) and P1.25m ($28,125), and that 6.5% be charged on those
priced between P1.25m ($28,125) and P3.199m ($71,978).
Housing for Humanity suggests that the Philippines should mimic a scheme that has proved successful in a number of South
American markets, especially Ecuador, under which families that borrow money for socialised housing put 10% of their income
towards the property, which the government matches with a 20% grant, and the remaining 70% is paid for via a loan from a partner
bank.
The next grouping up after socialised housing is the “low-income” market, at P450,000 ($10,125) to P600,000 ($13,500). This is
followed by the “economic sector” – P600,000 ($13,500) to P900,000 ($20,250) – and the “mid segment”, at up to P1.5m ($33,750).
Atencio groups all of these categories together as the affordable housing segment, and deems it a lucrative market for developers
to pursue so long as costs can be kept down to ensure affordability. “Our GNP has been steadily rising for the past 10 years at 7%,
generating enough of a trickle-down effect to benefit most levels of the socio-economic pyramid. As GNP trickles down to the
middle class, affordable housing becomes a beneficiary too, with prices for middle-class housing increasing far less than for
primary subdivisions or condominiums,” Atencio told OBG.
According to Colliers, the only segment to witness an increase in residential licences issued by the Housing and Land Use
Regulatory Board in 2014 was low-cost (+6.6%), with the firm attributing the rise to more local developers venturing into
affordable housing to meet the huge supply backlog. “While margins are tight and it is risky to maintain profitability, developers are
increasingly looking at the lower-income market instead of the top-tier market, as it offers far larger volumes and far greater
growth potential,” Anthony L Fernandez, the president and COO of construction firm First Balfour, told OBG.
MANAGING MARGINS: For a country that has suffered recurring natural disasters, enforcing minimum safety and design standards
is critical, and developers must adopt technology that enables reliable construction. Atencio also told OBG that affordable housing
need not be high-risk, and that the banking sector needs to serve the segment better.
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Projects in Manila are part of a host of construction schemes The adoption of environmentally friendly building practices is
across the Philippines gaining momentum in the Philippines
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