Global debt watcher Fitch ratings said Wednesday the rising income amid sustained economic growth should continue to drive robust real estate activity and loan growth in the Philippines in the medium term.
“The Philippines’ first nation-wide residential real-estate price index provides valuable information on the state of the property market and is consistent with the overall strengthening of market and regulatory tools and frameworks,” Fitch said in a statement.
The broad-based residential price index, which was released by Bangko Sentral on Monday, will enhance the information available for policymaking, improve market transparency and should be positive for banks’ risk monitoring, it said.
Data showed brisk but not excessive property price growth, suggesting that robust real-estate activity over the last few years had not led to significant overheating in the property market.
Fitch said property prices were an important macro-prudential risk indicator and excessive price inflation could be a sign of speculative over-heating, leading to elevated risks to bank asset quality and profitability.
“For now, this does not appear to be the case in the Philippines and asset quality remains benign amid what appears to be sustainable price appreciation. Residential and commercial real estate NPL ratios were 3.1 percent and 1.6 percent respectively at end-2015,” Fitch said.