THE number and value of approved construction projects year-on-year declined in July, the Philippine Statistics Authority (PSA) said in its latest report.
Approved construction projects totaled 14,342 or 2.4-percent lower compared to the same month last year, but 6.9 percent higher than the 13,413 recorded in June 2024.
Total amount of the projects was P41.21 billion or 14.1 percent lower than last year’s P47.95 billion, but higher than the P34.89 billion in June.
Rizal Commercial Banking Corp. chief economist Michael Ricafort attributed the year-on-year decline in approved construction projects to relatively higher interest rates that increased borrowing costs for both developers and buyers.
He also cited higher labor costs amid minimum wage hikes, higher cost of materials, and higher overall property prices that weighed on demand.
Residential buildings accounted for the majority of approved constructions at 9,652 or 67.3 percent of the total projects, valued at P15.97 billion. “It recorded an annual drop of 2.9 percent from the same month of the previous year’s level of 9,944 constructions,” PSA said.
Majority of the residential projects are single-type houses with 7,672 units amounting P11.76 billion.
Nonresidential projects, meanwhile, totaled 2,907 in July, valued at P21.41 billion, and which accounted for more than half of the total value of constructions during the period. Most of these are commercial buildings at 2,011 or 69.2 percent of the total number.
The PSA said nonresidential projects had the highest average cost at P13,615 per square meter (sqm) in July.
This was followed by residential construction at P11,007/sqm, and additions to existing constructions at P9,902/sqm.
Meanwhile, the floor area of approved construction projects also declined annually by 41.7 percent at 3.06 million sqm in comparison to last year’s 5.26 million sqm, PSA said.
Floor area of nonresidential projects were 1.57 million sqm or 51.2 percent of the total, while residential construction added up to 1.45 million sqm or 47.4 percent of the total floor area of construction in July 2024.
The PSA noted Calabarzon (Cavite, Laguna, Batangas, Rizal and Quezon) had the highest number and value of construction projects at 3,984 approved building permits amounting to P15.29 billion.
“For the coming months, further Fed local policy rate cuts will help reduce borrowing costs for real estate developers that would help spur new projects and supply,” Ricafort said, adding this will encourage property purchases.
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