Developer financing props up condo market, analysts say

DEVELOPERS’ flexible financing schemes are helping sustain the condominium market despite a decline in residential home loans, with property analysts attributing the disconnect to buyers using in-house payment arrangements before obtaining bank mortgages.

Their comments came after condominium prices rebounded 11.1% quarter on quarter even as residential home loans declined, a disconnect they attributed to the timing and structure of property financing.

Claro dG. Cordero, Jr., director for research and consulting and advisory services at Cushman & Wakefield Philippines, said developers have introduced incentives such as no spot down payments, zero-interest equity schemes, and payment terms stretched over five to 10 years to make purchases more affordable amid elevated borrowing costs.

Other offers, including rent-to-own arrangements and early move-in privileges, have also encouraged prospective buyers to proceed with purchases.

“In short, developers have engineered affordability at the entry point while defending headline values — and that combination is what the data is capturing,” Mr. Cordero told BusinessWorld in an e-mail.

Dino Mari G. Palanca, director of marketing and research at Savills Philippines, said buyers are opting for financing arrangements outside traditional bank mortgages.

He said the decline in housing loans reflects buyers choosing alternative financing arrangements, including extended in-house financing offered by developers or outright cash purchases.

Mr. Cordero said many condominium purchases are made during the pre-selling stage, when buyers pay installments directly to developers under equity-based payment schemes instead of obtaining bank financing.

“Since bank loans are typically taken only at turnover or completion, today’s sales activity does not immediately translate into new home loan volumes,” he said, describing the decline in bank lending as a “structural lag” caused by elevated borrowing costs and tighter credit conditions.

He added that the financing incentives have unlocked demand while allowing developers to maintain headline selling prices.

Mr. Palanca said flexible payment terms have improved affordability, while limited supply in prime locations and sustained demand from investors and overseas Filipinos have also supported condominium prices.

“The residential market remains highly segmented, with different buyer profiles responding differently to current market conditions,” he said in a Viber message.

Mr. Cordero said affordability remains a key challenge, noting that the median price of a house in Metro Manila now exceeds P8.3 million, placing homeownership beyond the reach of many salaried workers without financing assistance.

He added that some buyers are shifting to emerging growth corridors outside Metro Manila, particularly in northern and southern Luzon, where land is more affordable. Condominiums, however, continue to appeal to buyers seeking proximity to central business districts and transport infrastructure.

“The market is bifurcating along location and product lines, and the assets best positioned to hold value are those that pair genuine affordability with strong connectivity,” Mr. Cordero said. — Juliana Chloe A. Gonzales