Developers turn to government housing program amid condo slump

Real estate developers’ growing participation in government-backed housing programs could help revive sales and expand affordable homeownership, even as the industry grapples with a prolonged slowdown in condominium demand.

Joey Roi Bondoc, research director at Colliers Philippines, said partnerships between major developers and government housing initiatives could help move unsold inventory while supporting homeownership.

“To, somehow, make the unsold inventory move, it’s a good thing that major developers in the country joined government housing projects of the Department of Human Settlements and Urban Development and Pag-IBIG Fund’s Expanded 4PH, so that the industry keeps moving,” Bondoc said.

The partnerships integrate private-sector housing inventory into the government’s Expanded Pambansang Pabahay Para sa Pilipino (4PH) Program, with financing available to qualified Pag-IBIG Fund members.

According to the Department of Human Settlements and Urban Development, five major developers have signed memorandums of understanding with Pag-IBIG Fund to support the program: Megawide Construction Corp., Ayala Land Inc., through its Amaia and Avida brands, SM Development Corp., Filinvest Land Inc., and Robinsons Land Corp.

Under the agreements, participating developers will offer preferential rates and other incentives on selected projects to qualified members.

The initiative provides developers with another channel to reach potential buyers while giving Pag-IBIG members access to housing options backed by government financing. Pag-IBIG Fund earlier raised its maximum loanable amount to P10 million, potentially broadening options for eligible borrowers, subject to lending requirements and their capacity to pay.

Bondoc described the collaboration as a step in the right direction but said the extent of its impact would depend on sustained demand for housing.

“It’s a step in the right direction. It’s a good program between the government and private developers,” he said.

He also noted growing demand for house-and-lot developments outside Metro Manila, saying developers must consider changing buyer preferences when assessing opportunities.

Condo market in limbo

The government partnerships come as developers struggle to match housing supply with demand.

Bondoc said take-up of pre-selling condominium units, or units sold before completion, had fallen by an estimated 67% to 70% year on year, marking the weakest period since Colliers began tracking the market.

He cited around 3,000 pre-selling acquisitions in the first nine months of the year, compared with 13,000 launches and 10,000 take-ups recorded in 2025.

He added that around 32,000 completed condominium units remained unsold, underscoring the challenges posed by elevated financing costs and weak demand.

The partnerships offer a way to connect available inventory with qualified buyers, supporting the government’s homeownership push while giving developers additional sales channels.

Bondoc attributed the slowdown to several factors, including elevated mortgage rates, higher prices of goods, subdued consumer spending, economic uncertainty, geopolitical tensions in the Middle East and political developments that have made investors more cautious.

Mortgage rates of around 7.7% to 7.8% have made financing more expensive, adding to the upfront costs of purchasing condominium units through bank loans.

For units priced between P3.6 million and P7 million, Bondoc said the financial requirements could be beyond the reach of some prospective buyers, particularly those earning below P60,000 to P70,000 a month.

He also cited higher monthly down-payment requirements, which could prompt some buyers to withdraw from purchases or fail to qualify for bank loans.

The exit of Philippine offshore gaming operators (POGOs) has also affected the condominium rental market, Bondoc said, as Chinese workers employed by these operations had previously accounted for a significant share of demand for high-rise residential units in certain locations.

He recalled that the condominium market performed strongly from 2017 to 2019 before the pandemic disrupted activity and many Chinese POGO employees returned to China. The subsequent prohibition of offshore gaming operations further reduced that source of rental demand.

With pre-selling activity under pressure and completed units remaining unsold, the Expanded 4PH partnerships offer developers another potential route to reach qualified homebuyers. However, the program’s longer-term contribution will depend partly on sustained demand for the housing products being offered.

The government and private developers are seeking to align housing supply and financing with prospective homeowners’ needs as the condominium market works through its slowdown.