The pulse of Metro Manila’s real estate market has been a restless rhythm, a slow, deliberate beat echoing through the city’s streets. For the first quarter of 2024, the tempo shifted dramatically – a 765% surge in pre-sales, a stark contrast to the year prior, signaling a seismic shift in demand. This wasn’t just a fluctuation; it was a fundamental realignment of the landscape.
Backouts, exceeding take-up in the P3.6-million to P7-million segment, painted a troubling picture. A staggering 2,024 units were pulled back, dwarfing the 1,720 units that had previously been anticipated. This imbalance, a persistent trend, disproportionately impacted the lower mid-income area, where the backout rate reached a worrying 2,024 units, exceeding the anticipated take-up of 1,720.
The narrative isn’t simply about a slowdown; it’s about a fundamental change in how buyers are approaching the market. The affordable segment, with a remarkable 1,629 take-up against 728 backouts, demonstrated a resilient appetite, showcasing a surprising strength amidst the broader challenges. Conversely, the economic segment, with 864 take-up versus 96 cancellations, revealed a more cautious approach, highlighting the impact of rising borrowing costs and inflation.
The upper mid-income segment, a traditionally robust area, showed a more balanced response, with take-up exceeding backouts at 1,473 units against 1,228, though cancellations remained elevated. The upscale and luxury segments, while still exhibiting strong demand, saw volumes slightly smaller than anticipated.
Colliers Philippines’ report underscores a crucial point: Metro Manila’s residential market remains under pressure, despite the rebound in demand. Vacancy rates have climbed to 24.7% in the first quarter, with projections anticipating a further rise to 25.6% by the end of 2026. This surge in cancellations reflects a heightened awareness of the risks associated with elevated borrowing costs and escalating prices, a reality impacting buyers’ willingness to commit.
The economic and affordable segments are currently driving the majority of the take-up, suggesting a shift in consumer priorities. However, unsold inventory remains elevated, with ready-for-occupancy units representing a significant portion of the market – approximately 27,900 units as of the first quarter. The projected rise in supply could further exacerbate the situation, potentially slowing absorption and impacting overall market dynamics.
Looking ahead, the outlook remains complex. While some improvement in market absorption is anticipated, the risks associated with higher oil prices, persistent inflation, and fluctuating borrowing costs are significant. The pace of recovery will depend on a delicate balancing act – a careful navigation of demand, supply, and affordability.
