The housing backlog in the Philippines is a complex issue that has been a persistent problem for the country for many years. It is a multifaceted issue deeply rooted in the country’s socioeconomic fabric. A growing gap between the demand for affordable housing and the supply of such units characterizes the concern. This backlog expects to reach 6.57 million units last 2022, according to the Subdivision and Housing Developers Association (SHDA). This figure is a testament to the severity of the problem and the urgent need for practical solutions.
The housing backlog is not just a number; it represents millions of Filipino families lacking access to decent and affordable housing. It is a manifestation of the socioeconomic disparities in the country, where the pursuit of progress leaves behind the poor and the marginalized. The backlog also reflects the inefficiencies and shortcomings in the country’s housing policies and programs.
The housing backlog is a ticking time bomb that threatens to exacerbate the country’s poverty and inequality problems if not addressed promptly and effectively. It is a challenge that requires a comprehensive and holistic approach, considering the various factors contributing to the problem and the stakeholders involved in the housing sector.
The State of Housing in the Philippines
The high demand for affordable housing and a limited supply of such units characterizes the housing situation in the Philippines. Various factors, including the country’s rapid population growth, urbanization, and increasing informal settlers, drive the inflated market. On the other hand, the limited supply of affordable housing units is due to high land and construction costs, regulatory constraints, and the lack of access to affordable housing finance.
The tall demand and limited supply have resulted in backlog across different housing categories, with the most extensive backlog in the economic housing category related to families with a monthly income of Php 15,000 to Php 30,000. This category accounts for 58% of the backlog, highlighting the urgent need for affordable housing for low-income families.
The housing backlog distribution varies across the country. Certain regions, such as the National Capital Region (NCR) and Region IV-A, have a higher backlog due to their increased population density and rapid urbanization. These regions also have an increased incidence of informal settlers, further exacerbating the housing problem.
An Overview of the Subdivision and Housing Developers Association (SHDA)
The Subdivision and Housing Developers Association (SHDA), Inc. is the leading industry association for housing and urban development in the Philippines. Established in 1970, the association has provided quality housing solutions for Filipino families for over half a century. It has been committed to developing livable and affordable communities that promote the well-being of its residents.
SHDA has been steadfast in its commitment to providing quality homes to Filipinos. The association is proud of its milestones, including the partnerships it has forged to continue its mission and vision. As the association navigates through the industry’s challenges, it remains committed to being the leading advocate of sustainable, affordable, and inclusive housing in the Philippines.
The association’s involvement extends beyond its partnership with the Department of Human Settlements and Urban Development (DSHUD). SHDA has actively contributed to establishing key institutions that promote the growth and development of the housing sector. The association has reinforced its collaboration by showing unwavering support for the Pambansang Pabahay Para sa Pilipino (4PH) program.
SHDA’s Mandates and Goals
SHDA’s mission is to connect with a nationwide network of 350 member developers and benefit from their shared expertise. The association’s overarching theme is ‘Forging Livable and Affordable Communities Towards Sustainable Nation Building’. This profound mission guides every initiative and decision made by the association.
The overarching theme, ‘Forging Livable and Affordable Communities Towards Sustainable Nation Building,’ guides every initiative of SHDA. To further its commitment, SHDA aims to fortify partnerships, activate committees, and expand its reach. The association remains steadfast in serving its members and shaping livable, affordable communities, contributing to the broader narrative of sustainable nation-building.
SHDA has made significant contributions to the housing industry, promoting sustainable building practices and developing eco-friendly communities. Through its various initiatives, the association has helped increase the number of housing options available to Filipinos, especially those from low-income families. SHDA also significantly passed the Urban Development and Housing Act (UDHA) of 1992.
Addressing the Housing Backlog
Addressing the housing backlog in the Philippines requires a comprehensive and holistic approach that considers the various factors contributing to the problem and involves all stakeholders in the housing sector. This approach should include policy reforms, innovative financing mechanisms, and partnerships between the government, the private sector, and non-government organizations.
Policy reforms are needed to address the regulatory constraints that hinder the supply of affordable housing units. These reforms include streamlining the permitting process, revising zoning regulations, and promoting cost-effective and sustainable building technologies.
Innovative financing mechanisms are also crucial in addressing the housing backlog. These mechanisms include the development of a secondary mortgage market, expanding microfinance for housing, and promoting public-private partnerships in the housing sector.
Partnerships between the government, the private sector, and non-government organizations are also essential in addressing the housing backlog. These partnerships can leverage the resources and expertise of different stakeholders to deliver affordable housing units more efficiently and effectively.
Business Challenges in the Housing Industry
Multiple obstacles impede the growth and development of the Philippine housing industry. One of the most pressing issues is the limited access to land. With the country’s rapidly growing population and urbanization, the demand for land for housing development is high, with little suitable and affordable land available. The regulatory constraints and land ownership issues further compound the situation, making it difficult for developers to acquire and develop land for housing.
Another significant challenge is sustainable financing. The cost of developing affordable housing units is high, and the returns on such investments are often low. The model makes it difficult for developers to secure financing for their projects. Moreover, most low-income families, the target beneficiaries of affordable housing projects, lack access to affordable housing finance. This predicament is due to their low income, lack of credit history, and the high-interest rates charged by traditional financial institutions.
Creating an environment that encourages private sector participation is another challenge. The private sector plays a defining role in the housing industry, as it has the resources, expertise, and efficiency to deliver housing units on a balanced scale. However, the current environment could be more conducive for private sector participation due to regulatory constraints, high costs, and low returns. The drawback is evident in the slow permitting processes, which according to 8990 Holdings Chairman and Co-founder Mariano D. Martinez, is one of the longest hurdles in housing production.
Adjustments in the price ceiling, incentives for housing developers, public housing programs, national urban development framework plans, and conflict resolution mechanisms are also challenges the housing industry faces. The price ceiling for socialized and economic housing units often needs to be higher to cover development costs, making it unattractive for developers. The absence of adequate housing developer incentives discourages private sector participation. Insufficient and inefficient public housing programs fail to satisfy the demand for affordable housing units. The national urban development framework plan is often not aligned with the realities on the ground, leading to counterproductive and unsustainable urban development. Lastly, the lack of an effective conflict resolution mechanism leads to disputes and conflicts that delay housing projects and increase costs.
Despite these challenges, the housing industry in the Philippines has the potential to grow and develop. With the right policies, strategies, and partnerships, the industry can overcome these challenges and meet the demand for affordable housing units. The role of the Subdivision and Housing Developers Association (SHDA) is crucial in this regard. As the leading industry association for housing and urban development in the Philippines, SHDA has the mandate and the capacity to address these challenges and drive the growth and development of the industry.
Opportunities in the Housing Industry and Working with SHDA
Despite its challenges, the housing industry is a fertile ground for opportunities. The Subdivision and Housing Developers Association (SHDA) projects growth in the Philippine housing industry as developers work to clear the backlog accumulated during the pandemic. Partnering with SHDA provides access to a network of experienced developers and shared expertise, which can benefit new and existing businesses in the industry.
The demand for affordable housing in the Philippines is strong, creating a significant opportunity for real estate developers. The country is grappling with a substantial shortage of affordable housing, particularly in urban areas. The requirement has led to a robust demand for affordable housing projects, including low-cost and socialized housing. Real estate developers who can address this need for volume production are likely to find success in the Philippine market.
Other Areas For Residential Growth
The Business Process Outsourcing (BPO) sector has been a significant driver of demand for office space in the Philippines. With a highly skilled and educated workforce, a favorable business environment, and competitive costs, the country has become a hub for BPO companies. This growth in the BPO sector has led to increased demand for office space, creating opportunities for real estate developers.
The expansion of the tourism industry has also created opportunities for real estate developers to invest in hotel and resort properties and other tourism-related infrastructure. The Philippines, known for its natural beauty, rich culture, and friendly people, is a popular tourist destination.
The Philippines has a large population of Overseas Filipino Workers (OFWs), many of whom are interested in investing in real estate. The circumstance has created a strong demand for properties that can serve as investment vehicles, such as rental properties and vacation homes. Developers who can tap into this market will likely succeed in the Philippine real estate industry.
Working with SHDA provides a unique opportunity to tap into these markets. The association’s network of 350 member developers provides a wealth of shared expertise and experience. This network can be a precious resource for businesses looking to navigate the complexities of the housing industry in the Philippines. Moreover, SHDA’s commitment to forging livable and affordable communities aligns with the opportunities presented by the strong demand for affordable housing and the growth of the BPO sector.
Why Partner Up With SHDA?
It is essential to note that these opportunities come with their respective challenges. The Philippine real estate industry is highly competitive, with many established players and new entrants vying for market share. This competition can make it difficult for new or smaller developers to gain a foothold in the market.
The lack of affordable financing options can also pose a challenge for developers. Real estate development requires significant capital investment, but the lack of affordable financing options can make it challenging for developers to secure the funds they need. Smaller developers may not have the same access to financing options as the larger, more established competitors.
Despite these challenges, the opportunities in the housing industry and the potential benefits of partnering with SHDA make it an attractive prospect for businesses. Real estate businesses can succeed in the Philippine housing industry with the right strategies and a commitment to overcoming the challenges.
Case Studies of SHDA Projects
The Subdivision and Housing Developers Association (SHDA) has been instrumental in various projects across the Philippines, demonstrating its commitment to developing sustainable and affordable housing. A notable example of SHDA’s initiatives is the annual National Developers Convention, a collaborative effort with the Department of Human Settlements and Urban Development (DHSUD). This convention serves as a platform for housing and property developers, major practitioners in the housing industry from the national and local governments, and key stakeholders in the housing sector to discuss how they can partner in redesigning the housing industry through innovation and green initiatives.
The convention’s theme, “Beyond The Pandemic: The Future of Housing,” encapsulates the organization’s forward-thinking approach. It emphasizes the need for resilient buildings for better homes and process innovations to streamline regulatory choke points. The event also highlighted the most talked-about trends in the housing development sector, including the return on investment or ROI on going green for housing projects, disruptive and innovative technologies in housing development, and the creation of smart subdivisions, which is a vital component in making smart cities possible.
Guest speakers at the convention discussed the benefits of using green initiatives and technological innovations to lower costs in building mass housing projects. Maya K. Colayco, an SHDA governor, stated, “We want to showcase innovative tech solutions to pain points experienced by housing developers”. Atty. Joy Z. Manaog echoed this sentiment, first vice president and chair of the National Convention Committee, adding, “We want to show our member developers and colleagues in the housing industry that it is not just desirable, but also financially feasible to build a green mass-housing subdivision”.
The convention is a testament to SHDA’s commitment to fostering innovation and sustainability in the housing industry. It showcases the organization’s efforts to promote green initiatives and technological advancements in housing development, thereby contributing to the creation of smart subdivisions and, ultimately, smart cities. This case study exemplifies the potential of SHDA’s initiatives in transforming the housing industry in the Philippines, providing valuable insights for stakeholders and potential investors in the sector.
