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Q1 building permit approval growth slows on rising costs

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APPROVED building permit applications rose 1.8% year on year in the first quarter, slowing from the 9.2% posted in the fourth quarter and the 4.7% year-earlier rate.

Preliminary data from the Philippine Statistics Authority indicated that first-quarter permit approvals totaled 37,270, with the building projects covered by the permits valued at P86.78 billion with a floor area of 7.720 million square meters (sq.m.).

The value of approved projects fell 0.9% year on year, while floor area rose 6.5%.

“The rising cost of construction materials brought about by rising inflation, interest rates, currency depreciation and the persistent supply chain constraints contributed to the slower growth despite the economy being open,” Asian Institute of Management economist John Paolo R. Rivera said in a text message. 

The Russia-Ukraine war began in the first quarter of the year, which disrupted the global supply chain and caused oil prices to surge. This trickled down to commodity prices of goods and services to rise.

Metro Manila and surrounding provinces were placed under Alert Level 3 in January, gradually easing to a more permissive Alert Level 1 in March.

Retail price growth of construction materials accelerated to 3.7% in the first quarter from 1.2% a year earlier. Growth in wholesale prices for the period also accelerated to 5.7% from 1.8% a year earlier.

Permits issued for residential projects, which accounted for 71.2% of the total, rose 4% to 26,546. These projects were valued at P45.01 billion with a floor area of 4.132 million sq.m.

Permits for single detached homes, which accounted for 85.9% of all residential construction, rose 0.6% to 22,790, with growth slowing from 3.1% in the fourth quarter and the 9.3% recorded a year earlier.

Non-residential project permits totaled 6,145 during the period, up 6.0%.

Commercial construction accounted for 4,324 approved permits (up 10.2%); institutional, 1,007 (up 1.7%); and other non-residential projects, 175 (up 2.9%). 

Industrial building permits declined 9.1% to 450 while agriculture project permits fell 14.5% to 189. Permits for additions to existing structures climbed 28.1% to 1,131 in the first quarter, while alteration and repair permits dropped 21.7% to 3,448.

The Calabarzon region — which is composed of Cavite, Laguna, Batangas, Rizal, and Quezon — accounted for 26.1% of all approved building permits in the first quarter with a tally of 9,725, followed by Central Luzon with 13.4% (5,002 permits), and Ilocos region with 9.9% (3,699).

By value, Calabarzon accounted for P20.22 billion worth of construction products in the first three months. This was followed by the National Capital Region with P14.79 billion and Central Luzon with P10.26 billion.

“Individuals and companies may seem to delay construction until the economic headwinds taper hopefully by 2023. Should the current trend in economic fundamentals continue, a slowdown is expected until the end of the year” Mr. Rivera said. — Ana Olivia A. Tirona

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  • Published: 2 months ago on October 6, 2022
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  • Last Modified: October 6, 2022 @ 12:07 pm
  • Filed Under: Economy, Editor's Pick

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