Editor's Note: This update reflects the true Real Estate & Construction Loans to GDP ratio published last June 25, 2012. The previous figures were published in error.
Is there a real estate bubble in the Philippines? Several people, including Finance Secretary Cesar Purisima and high profile businessman Andrew Masigan have asked this question earlier this year. Both have come to the conclusion that there is no real estate bubble - yet.
But does the data bear this out? Based on the data available from the banking system, if we are in a real estate bubble, we are only in the beginnings of one. Given the growth in our country's GDP since 1999, Real Estate Loans, on an absolute basis, have picked up noticeably since 2008, but construction loans have not.
On a relative basis, Real Estate and Construction Loans as a percentage of GDP have dropped considerably since 1999, from a high of 7.56% of GDP in June 1999 to a low of 4.43% of GDP as of March 2007. Today, that ratio has gone up considerably, and now stands at 6.46% as of September 2011. So Real Estate and Construction Loans relative to GDP have bottomed out but not have approached near peak levels of 7.56% of GDP. It is important to note that the availability of banking data available on www.bsp.gov.ph goes back only to March 1999. There previous peak levels could have been much higher.
|Philippine Banking System|
|Real Estate & Construction Loans vs. GDP|
|March 1999 to September 2011|
|In Peso Billions|
|Quarter/Year||Real Estate Loans||Construction Loans||Real Estate & Construction Loans||GDP (Current)|
|Source: www.bsp.gov.ph and www.nscbgov.ph|