Is There a Real Estate Bubble in the Philippines?

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)
March 1999	198	57	255	3,244
June 1999	222	56	278	3,244
September 1999	221	55	275	3,244
December 1999	190	54	243	3,244
March 2000	213	51	264	3,581
June 2000	220	49	269	3,581
September 2000	180	89	269	3,581
December 2000	224	47	271	3,581
March 2001	203	51	255	3,889
June 2001	205	43	248	3,889
September 2001	204	44	249	3,889
December 2001	204	42	246	3,889
March 2002	212	43	255	4,198
June 2002	207	40	247	4,198
September 2002	203	40	242	4,198
December 2002	204	36	239	4,198
March 2003	250	47	297	4,548
June 2003	250	46	296	4,548
September 2003	261	48	309	4,548
December 2003	262	47	310	4,548
March 2004	260	53	312	5,120
June 2004	257	37	294	5,120
September 2004	255	36	291	5,120
December 2004	262	36	297	5,120
March 2005	252	41	293	5,678
June 2005	253	35	289	5,678
September 2005	268	35	304	5,678
December 2005	258	34	293	5,678
March 2006	273	33	306	6,271
June 2006	288	33	321	6,271
September 2006	284	33	318	6,271
December 2006	291	34	325	6,271
March 2007	272	34	305	6,893
June 2007	287	37	324	6,893
September 2007	285	37	321	6,893
December 2007	290	36	326	6,893
March 2008	290	30	320	7,721
June 2008	339	34	373	7,721
September 2008	358	37	396	7,721
December 2008	400	41	441	7,721
March 2009	393	32	426	8,026
June 2009	418	31	449	8,026
September 2009	420	32	452	8,026
December 2009	448	33	481	8,026
March 2010	455	34	488	9,003
June 2010	465	35	500	9,003
September 2010	466	35	502	9,003
December 2010	497	36	534	9,003
March 2011	521	37	558	9,361
June 2011	542	40	581	9,361
September 2011	564	41	605	9,361
Source: www.bsp.gov.ph and www.nscbgov.ph