BSP delays launch of its first business property worth index

AN AERIAL VIEW reveals the Ortigas enterprise district in Pasig Metropolis, June 10, 2022. — REUTERS

THE PHILIPPINE central financial institution delayed the discharge of its up to date Residential Actual Property Worth Index (RREPI) and the launch of its first Industrial Property Worth Index (CPPI) after suggestions made by the Worldwide Financial Fund (IMF).

In a report launched on Tuesday, the IMF stated it really helpful additional enhancements to the strategies used for the property worth indices, after it carried out a technical help mission between Could 16 and June 17 final yr.

“Some additional enhancements to the strategies needs to be carried out, together with amending the extent at which the weights are utilized within the aggregation course of. The BSP determined to delay the launch of the up to date RREPI and new CPPI to implement these modifications,” it stated, including that modifications needs to be “absolutely examined.”

The BSP had deliberate to launch its first CPPI in 2021, because it broadens its watch on the business property sector.

It at present releases quarterly experiences on RREPI, which screens the modifications within the costs of residential properties within the nation. This offers the BSP insights into the property market the place financial institution publicity is regulated.   

The IMF famous that dependable property worth indices and different indicators of actual property markets are “crucial elements” for monetary stability coverage evaluation. Coverage makers can use these indices to design macroprudential insurance policies, and to tell financial coverage and inflation focusing on.

“Within the medium time period, the BSP ought to proceed to develop the statistical methodology by introducing hedonic regression for high quality adjustment inside the strata. The data to start creating hedonic fashions can be found as a part of the present knowledge assortment from the business banks,” the IMF stated.   

The BSP must also broaden the capability of the group via coaching programs and additional technical help, it added.

The IMF stated the central financial institution additionally “dedicated to rising the protection of the statistics to incorporate each money purchases and different types of nonbank lending.”

To entry new knowledge sources, the IMF stated the central financial institution can be planning to convene an interagency working group on property worth statistics, composed of members from the BSP, Philippine Statistics Authority, the Land Registry Authority and different companies.   

At current, the BSP makes use of quarterly experiences from the business banks for its property worth statistics.

“The BSP are within the early phases of researching new knowledge sources for his or her property worth statistics. The really helpful strategy devised throughout the mission are solely preliminary steps. It is going to take time and sources to appreciate the aim of shifting to new administration knowledge sources,” the IMF stated.

Citing BSP estimates, the IMF stated lending by the banking sector accounts for about 48% of residential property transactions.     

Money purchases or direct lending by property builders account for 23% of transactions whereas government-backed lending for social housing functions, primarily by the Residence Growth Mutual Fund, account for 29%.    

“Within the quick time period, the BSP may take into account gathering info on residential property ads from actual property web sites. Some examples of internet sites within the Philippines are Lamudi, Zipmatch, Dot Property, Craigslist and Carousell,” the IMF stated, including this may present extra knowledge to help the statistics.

Based mostly on the most recent knowledge from the central financial institution, the RREPI rose by 6.5% yr on yr within the third quarter final yr. That is quicker than the two.6% progress within the second quarter, and the 6.3% growth in July-to-September interval in 2021. — Keisha B. Ta-asan

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