December 12, 2024 | 12:00am
MANILA, Philippines — Softer inflation and lower policy rates would be favorable for the residential market, according to a professional services and investment management company.
In its latest market intelligence report, Colliers Philippines said lower inflation may lead the Bangko Sentral ng Pilipinas (BSP) to cut interest rates.
It cited the Development Budget Coordination Committee (DBCC)’s forecast of inflation to average between 3.1 and 3.3 percent this year, lower than the six percent recorded a year ago.
“Colliers believes that lower inflation will likely compel the central bank to cut interest rates,” Colliers said.
“In our view, easing inflation and policy rates should have a positive impact on the property market, particularly for the residential segment which is still recording stifled take-up,” it added.
In its Q3 Metro Manila Residential Report, Colliers noted that the Metro Manila residential market has a substantial amount of unsold ready-for-occupancy (RFO) units of around 27,000 units.
Figures from Colliers showed that only about 9,300 units were sold in the pre-selling market in the nine months of the year, down 53 percent year-on-year.
“In our view, the rate cuts imposed by the Philippine central bank should result in lower mortgage rates and help revive the appetite for condominium units. Analysts are projecting the central bank to cut interest rates to as low as 4.0 percent by H1 2025,” Colliers said earlier.
In a recent report, ANZ Research said the central bank could cut its key rate by 25 basis points to 5.75 percent at its Dec. 19 policy meeting, following the release of November inflation data.
“Overall, the inflationary pressures were not broad-based and the near-term outlook remains benign. Therefore, we think the BSP will lower its policy rate by 25 basis points at its next meeting in December along with cumulative cuts of 75 basis points in 2025 to help bolster domestic demand,” ANZ Research said.
Headline inflation quickened to 2.5 percent in November from 2.3 percent in October, marking its second straight month of increase. This brought the average inflation for January to November to 3.2 percent, still within the DBCC’s target.
The Philippine Statistics Authority (PSA) attributed the uptrend in overall inflation to the heavily weighted food and non-alcoholic beverages, which posted a faster uptick of 3.4 percent in November from 2.9 percent in October.
Inflation for food alone went up to 3.5 percent in November from the previous month’s three percent due mainly to the increase in vegetable prices.
Rice inflation, on the other hand, slowed to 5.1 percent in November from the previous month’s 9.6 percent.
“Our expectation for December is inflation for rice will go down, which is good news for households,” PSA chief Dennis Mapa said earlier.
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