Earlier, property consultant KMC-MAG expressed concern about the threat posed by developers’ focus on financing when their expertise is in construction.
“When you build an econometric model for housing, on top of that is finance. The more accessible housing finance is, the more housing (projects) there will be,” said Atencio.
“Finance is dictated by affordability. If housing finance is stopped, interest rates are high, entry requirements are high say at 20 percent down payment, then demand will be very small,” he added.
Antton Nordberg, KMC MAG Group Inc.head of research, said apart from finance not being a core competency of developers, there is also no clear picture on the size of the in-house financing market which remains unregulated.
“Overall, it’s been increasing quite fast,” he said, noting the Central Bank’s policy to scale back bank’s lending activity may have also contributed to the rise of in-house financing.
“Why this is a problem (is because) developers’ core expertise is not necessarily in the financing of products but rather in the development. So there might be some serious underestimate(ion) in the credit worthiness of the home buyer since (this is) more of risk management than project development,” he added.
Nordberg, however, was quick to point out that the risk is not an immediate threat. Still this could pose a problem should some external shocks arise.
“It’s not really an issue right now but if there are some external shocks, it might cause some problem,” he said.
Atencio said while developers should not be bankers, as KMC-MAG, they will undertake initiatives to move housing forward.
Atencio said state-housing fund Pag-IBIG had been successful in lowering the cost of housing for buyers through lower interest rate and lower premiums, making housing more affordable,”
By ALBERT CASTRO/January 28, 2016/ http://www.malaya.com.ph/
Affordable housing finance remains a key in propelling the growth of the housing sector.
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