Philippine House Prices Have Resumed Their Relentless Upward Climb

In the last quarter of 2016, the Philippine House Price Index climbed by 2.33% to 218.47 from a low of 213.50 in the third quarter of 2016.  Overall, house prices are still 0.94% below their peak of 220.99 posted in the first quarter of 2016.

This is similar to what happened in Hong Kong, where home prices jumped 6.91% in the third quarter of 2016.

See related post:

After a 10% Market Decline in Late 2015 to Early 2016, Hong Kong Home Prices Resume Their Relentless Upward Trend in late 2016

Which Philippine Region Has the Highest Income Inequality?

We all know that Metro Manila, otherwise known as the National Capital Region (NCR), is the richest region in the Philippines.  Without question, it is the center of government, business, and finance in the entire country.

This is plainly evident in the 2015 Family Income and Expenditure Survey (FIES), where the NCR towers above the rest of the country in terms of Median Income Per Capita: Php 313,000 for NCR vs. Php 180,000 for the entire Philippines.

But which region has the highest income inequality?  One easy way to do that is by taking the ratio of the tenth decile (the top 10% in income) to the first decile (the bottom 10% in income).

From the 2015 FIES, we get this table...

	Median Income Per Capita (In Thousands of Pesos)
Region	Overall	Bottom 10%	Top 10%	Top/Bottom
Philippines	180	83	652	785.54%
NCR	313	164	940	573.17%
CAR	196	93	595	639.78%
Region I - Ilocos Region	173	99	553	558.59%
Region II - Cagayan Valley	168	98	557	568.37%
Region III - Central Luzon	223	103	614	596.12%
Region IVA - Calabarzon	234	106	711	670.75%
Region IVB - MIMAROPA	142	79	608	769.62%
Region V - Bicol Region	136	88	482	547.73%
Region VI - Western Visayas	149	87	523	601.15%
Region VII - Central Visayas	160	62	607	979.03%
Region VIII - Eastern Visayas	124	72	526	730.56%
Region IX - Zamboanga Peninsula	127	73	503	689.04%
Region X - Northern Mindanao	135	68	612	900.00%
Region XI - Davao Region	166	85	571	671.76%
Region XII - SOCSKSARGEN	123	56	495	883.93%
Region XIII - Caraga	134	74	544	735.14%
ARMM	115	82	255	310.98%

and this chart:

Based on this, we can see that the region with the highest income inequality is actually Region VII - Central Visayas, composed of the three provinces of Bohol, Cebu, and Siquijor.  In terms of overall income, this region is "middle of the road." Its median income per capita was only Php 160,000 in 2015, slightly lower than the Philippines median income per capita of Php 180,000. But, in Central Visayas, the top 10% earn almost 10 times the bottom, higher than the overall Philippine ratio of 7.85 times.

NCR was actually more egalitarian, wherein the richest 10% "only" earned 5.73 times the poorest 10%.  Surprisingly, the most egalitarian region is also the poorest: ARMM, where the median per capita income is only Php 115,000 (around US$ 2,300). There, the richest 10% earn "only" around 3.11 times the poorest 10%.

Philippine Real Estate and Construction Loans Are Out of Whack As of September 2016!

It sure looks that way, judging from this chart:

It looks like Real Estate and Construction Loans as a percentage of Total Loan Portfolio (TLP) rocketed past its historical range of 12.6% to 16.6% of TLP sometime in 2011.  That ratio peaked at 20.55% as of September 2013 but has bottomed out at 18.61% of TLP as of December 2014. In 2016, this ratio has climbed back up to 20.04% as of September 2016.



Now, are we up to the levels of the previous real estate boom? (as in mid 1990s to 1997?) Honestly, we don't know.  BSP data only goes as far back as 1999 when the previous real estate bubble had already burst and the financial system was most likely deleveraging as evidenced in this chart:

Has the Philippine Real Estate Bubble Already Burst?

Is There a Real Estate Bubble in the Philippines?


Are Philippine Real Estate Loans Out of Whack?

Great Depression vs. Great Recession GDP Growth Rates - Updated As of the Fourth Quarter 2016

In March 2015, two illustrious economists, both Former Fed Chairman Ben Bernanke and Former Treasury Secretary Larry Summers have been duking it out on the blogosphere about secular stagnation.  In layman's terms, both are attempting to describe why does the US Recovery from the Great Recession feel so sluggish.

Although the overall collapse in REAL GDP was relatively shallow  (-3.1% from peak to trough in real terms and -0.4% in nominal terms) and took place over two years (2008 to 2009), the recovery in the seven years since then has been very anemic.  The economy reached parity with its pre-recession peak GDP in nominal terms in 2010, only three years after the Great Recession started in December 2007.   In real terms, it took an additional year, by 2011, to reach parity with its pre-recession peak.  By the 4th Qtr of 2016, the US economy is only 30.81% larger, in nominal terms, than the bottom in 2009, averaging only 3.91% growth every year since the Great Recession bottomed out. In real terms, the US economy is only 16.41% larger than the bottom in 2009, averaging only 2.19% growth every year since 2009.

The overall economic contraction during the Great Depression was much more severe (-46% in nominal terms and -27% in real terms from peak to trough) and took much longer (four years from 1930 to 1933).  In real terms, economic parity with its pre-depression peak was only reached in 1936, seven years after the start of the Great Depression. Despite the severity and depth of the economic contraction, it only took three years after the 1933 bottom for the US economy to reach parity (in real terms) with pre-depression peak in 1929.  Recovery, in terms of economic growth rates, was a lot more robust, averaging 10.9% annually during this period.  In the four years since the US economy bottomed out in 1933, the US economy was 43.5% larger than the bottom in 1933, averaging 9.44% growth per year every year. In nominal terms, the US economy only recovered its pre-depression peak only sometime in 1941, when WWII spending began in earnest.

Great Depression vs. Great Recession