Philippine Markets Newsletter

MONDAY MACRO: Trend in real estate may change the dynamics of the economy

August 13, 2023

Real estate drives economic growth through factors like building infrastructure, forming capital, job opportunities, and tax contributions. It’s not just a financial barometer for the economy’s present and future, but also a window into evolving consumer behavior.

Today we’ll explore the real estate price index—a key indicator—and how its current trend is indicating intriguing shifts.

Philippine Markets Newsletter:
The Monday Macro Report
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The Real Estate Price Index (RRPI) serves as a metric for assessing fluctuations in residential real estate prices, encapsulating house price inflation within the market.

The computation of this index involves evaluating various housing categories, including townhouses, duplexes, condominium units, and single or detached homes. These categories are then further divided into two classifications: residential real estate within the national capital region (NCR) and properties outside the national capital region (AONCR).

Recently, there has been a decline in residential prices within NCR for two successive quarters. This trend marks a significant occurrence—the first instance of back-to-back declines in the region.

The observed price decrease can be attributed to an increase in housing supply driven by residents seeking housing options beyond the region.

This shift in residential behavior emerged during the pandemic when individuals found themselves confined to their homes. This period prompted a transformation in housing preferences, sparking a broader transition to a different lifestyle approach.

These shifts led to a rise in property listings as more people opted to sell, augmenting the overall supply in the market. In addition, the inclination towards properties outside NCR gained momentum, redirecting demand away from NCR properties, resulting in an evident upward trend in AONCR property prices.

The evolving consumer preferences within the real estate sector as illustrated above carry far-reaching implications for the broader economy. An increased demand for real estate outside NCR could fuel job creation, infrastructure investment, and local business growth.

Concurrently, this shift is poised to reshape spending patterns, diverting disposable income from urban-centric goods and services to real estate investments. Businesses may need to adapt, innovating their offerings to cater to evolving community needs.

We’ll also need to continue looking at this trend to see what it means for commercial real estate, especially with more people opting to work from home outside of the central business districts.

About the Philippine Markets Newsletter
“The Monday Macro Report”

When just about anyone can post just about anything online, it gets increasingly difficult for an individual investor to sift through the plethora of information available.

Investors need a tool that will help them cut through any biased or misleading information and dive straight into reliable and useful data.

Every Monday, we publish an interesting chart on the Philippine economy and stock market. We highlight data that investors would normally look at, but through the lens of Uniform Accounting, a powerful tool that gets investors closer to understanding the economic reality of firms.

Understanding what kind of market we are in, what leading indicators we should be looking at, and what market expectations are, will make investing a less monumental task than finding a needle in a haystack.

Hope you’ve found this week’s macro chart interesting and insightful.

Stay tuned for next week’s Monday Macro report!


Angelica Lim
Research Director
Philippine Markets Newsletter
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