Construction permits in Philippines dropped 14.6% in January

In January, the Philippines saw a significant drop in approved construction permits. The number fell to 12,526, marking a decrease of 14.6% compared to the same month last year. This decline is the most severe in eight months, attributed to high prices for building materials and strict financial conditions. The data comes from the Philippine Statistics Authority (PSA). While the number of permits dropped, the total floor area for new projects increased. The combined area reached 3.72 million square meters, showing a 29.5% rise from the previous year. The total value of new buildings in January was P48.58 million, up by 26.1% due to rising material costs. Economist Rischelle Alysha Legaspi explained that higher costs for materials and borrowing are affecting demand for new properties. She noted that both residential and commercial projects are experiencing fewer permits despite increased construction value. The slowdown in economic growth and unchanged interest rates may also deter investments. Looking at specifics, permits for new residential projects decreased by 14.1%, with 7,671 permits issued. These projects accounted for 1.45 million square meters and were valued at P20.94 million, which is up by 28% from a year earlier. Commercial project permits dropped by 4.3% to 3,138, covering 2.22 million square meters and valued at P24.16 million, a 40.4% increase year-on-year. Legaspi suggests that easing inflation and potential interest rate cuts could boost demand for new constructions. However, she warns that geopolitical uncertainties might lead to higher inflation if there are disruptions in imported construction materials, which could reduce consumer interest in property investments.