By Katherine K. Chan
SLUGGISH DEMAND and oversupply of condominium units available in the market have dampened the expansion in prices of residential properties within the National Capital Region (NCR), analysts said, which could persist until yearend because the glut stays.
Joey Roi H. Bondoc, director and head of research at Colliers Philippines, said weak demand for condominium units within the middle-income segment led to the slow growth of housing prices in NCR.
“I believe we’ll attribute that to (the) slower take-up of unsold condominium units within the secondary, ready-for-occupancy (RFO) market,” he told BusinessWorld in a phone interview.
He said about 31,000 condominium units remain unsold within the RFO market, with nearly 60% under the mid-income segment or those value P3.6 million to P12 million per unit.
Home prices in Metro Manila posted a slower growth of two.4% within the second quarter from 13.9% within the January-March period and 9.3% in the identical quarter last yr, the Bangko Sentral ng Pilipinas’ (BSP) Residential Property Price Index (RPPI) showed.
Quarter on quarter, NCR housing prices contracted by 3.6%.
Condominium unit prices also dipped by 0.2%, a reversal from the 11.5% increase a yr prior and the ten.6% growth last quarter.
Roy Amado L. Golez, Jr., director for research and consultancy at Leechiu Property Consultants, said buyers’ sentiment and preferences also affected the expansion of condominium prices in the course of the period.
“The slowdown in year-on-year growth in condominium prices in NCR from Q1 2025 (13.9%) to Q2 2025 (2.4%) might be attributed to the oversupply, cautious buyer sentiment, and possible shift in buyer preferences,” he told BusinessWorld in an e-mail. “Buyers are responding with a more critical examination of their needs before making any property purchases. There are less instances of speculative purchases available in the market today for NCR.”
Mr. Golez said secondary or pre-owned units sold at lower prices are also cornering a number of the demand for housing.
“Note that the RPPI doesn’t cover only primary units from developers — secondary units are competing for demand, and motivated sellers sell at a reduction so that they can liquidate their properties,” he said.
“With the low-yield environment, some owners are finding it more attractive to flip their condominium investments and divert to alternative instruments. This can even include sales of condominium units at discounted prices that developers are offering to maneuver their unsold inventory.”
He added that developers’ project launches in Metro Manila have slowed as they still have existing inventory.
Claro dG. Cordero, Jr., director for Research, Consulting & Advisory Services at Cushman and Wakefield, said the past quarters’ strong performances could have amplified the worth growth slowdown, adding that the 13.9% growth in the primary quarter was “somewhat difficult to match.”
“That doesn’t mean though that the decline was very sharp,” he added.
Mr. Cordero also linked the oversupply of condominium units to the ban on Philippine offshore gaming operators (POGOs), whose employees previously resided in such properties.
“(A) lot of the surplus inventory is on account of the proven fact that the units were vacated by POGOs… So, for the reason that POGOs left late last yr, loads of them were brought back to the market,” he said.
Meanwhile, expensive financing and high mortgage rates are also affecting demand for condominium units within the rental market, Mr. Bondoc said.
He said the mortgage rate for a five-year term ranges from 7.7% to 7.8% and would cost more if longer than five years.
“So, the rental market is experiencing sluggishness at this point… meaning if I purchase a condominium unit (and) once it’s turned over, will I have the ability to rent it out to a BPO worker or a foreign worker?” Mr. Bondoc said.
“Unfortunately, the rental market is slowing in Metro Manila immediately because again (there are) loads of unsold condominium units (and) owners are imposing lower rental rates,” he added.
BSP data showed that the median price for all housing types within the Philippines stood at P3.4 million within the second quarter. Condominium units had a median price of P3.8 million, while houses cost around P3.1 million.
Houses within the NCR were the costliest at a median price of P7.01 million, while houses in other areas within the Philippines were the most cost effective at about P2.7 million.
SLOW TAKE-UP TO PERSIST
Mr. Golez said condominium sales have improved as of the third quarter amid lower rates of interest.
“Now… we’re seeing renewed buyer activity within the (Metro Manila) condominium market,” he said. “Lower rates of interest could also be fueling this rise in demand, in addition to discounts and promos from developers.”
The central bank’s policy rate currently stands at 4.75%, the bottom in over three years. It has lowered benchmark rates of interest by 175 basis points since kicking off its easing cycle in August 2024, and BSP Governor Eli M. Remolona, Jr. has left the door open to more cuts in the approaching months to assist boost domestic demand on account of a softer economic outlook as a widening corruption scandal involving government infrastructure projects has affected business sentiment.
Nonetheless, condominium price growth, particularly for secondary units, in NCR will likely remain flat but could recuperate within the medium term once supply levels develop into more manageable and rental yields improve, Mr. Golez said.
“The pace of recovery will rely on how quickly developers clear unsold stock, whether buyer sentiment improves, and when rental demand picks up. Until then, we are able to expect subdued price growth.”
Mr. Bondoc said tepid demand for condominium units in Metro Manila will likely persist until yearend because the variety of unsold units stays significant. Nonetheless, developers’ RFO promos and discounts could help attract buyers.
“We saw that there was an improvement in take-up of condominiums in (the) second quarter this yr due to promos and discounts offered by developers. But let’s see if that will likely be sustained. But when it comes to rental prospects and appetite for condominium units for rent, we’re prone to see slower demand for the rest of 2025,” he added.
He said the “strong” demand seen for residential properties outside Metro Manila is making up for the slowdown seen within the capital.
“I believe what’s offsetting that continues to be a powerful take-up outside of Metro Manila. So, that has been offsetting the lukewarm appetite for condominium units within the capital region at this point. That’s still a positive for the market that we’re seeing.”
“Buyer interest is increasing for housing options outside NCR, especially for landed housing. Developers are responding in kind by continuing to develop townships outside NCR, capitalizing on infrastructure improvements and lifestyle appeal,” Mr. Golez added.
In areas outside NCR, home prices rose by 11.5% within the second quarter, faster than the three% growth logged in the primary quarter and seven.2% the previous yr, BSP data showed.
Mr. Cordero said they see home prices rising within the near term, particularly within the pinch areas in emerging regions comparable to Cebu.
“That’s driven by sustained demand for larger living spaces and more horizontal developments in addition to regional migration and infrastructural enhancements.”