APPROVED building permits continued to decline by record double digits in January, the Philippine Statistics Authority (PSA) reported.
The PSA, citing preliminary data, said building projects covered by the permits numbered 12,526 in January, contracting by 14.6% from 14,665 a year earlier.
This was the second straight month that construction starts fell. January’s decline was steeper than the revised 5% year-on year drop logged in December last year.
It was the largest decline to date since the PSA began tracking the indicator on a monthly basis in January 2024. Previously, approved building permits data were released on a quarterly basis.
Building projects in January covered a floor area of 3.72 million square meters (sq.m), up 29.5% from a year earlier.
Construction projects represented by the permits were valued at P48.58 billion in January, 26.1% higher from P38.52 billion a year earlier.
Reinielle Matt M. Erece, economist at Oikonomia Advisory and Research, Inc. said that the decline in construction activity can be an indicator of a “waiting” behavior from developers as they expect rate cuts this year, which can help them save costs in financing these projects.
“I expect this behavior to change this year as rate cuts are seen underway and the price of construction materials has stabilized,” he said in an e-mail.
Last year, the Bangko Sentral ng Pilipinas (BSP) slashed benchmark rates by a total of 75 basis points (bps) since its easing cycle in August, bringing policy rate at 5.75%.
However, in February during its first policy meeting this year, the BSP kept its policy settings, surprising market expectations and at the same time signaled fewer rate cuts this year.
BSP Governor Eli M. Remolona told Bloomberg in a televised interview last March 19 that the central bank could still cut rates next month up to 75 bps if economic output weakens.
Headline inflation rose 2.9% in January, steady as December.
In February, inflation slowed to 2.1%, bringing the average inflation rate in the first two months to 2.5%, within the central bank’s 2-4% target.
Additionally, retail price growth in the National Capital Region (NCR) eased to 1.2% in January, its weakest pace in five months.
Construction materials retail price index (CMRPI) in January was slower than the 1.5% in December and 1.4% recorded in January 2024.
On the other hand, construction materials wholesale price index (CMWPI) also slowed to a record 0.1% that month, lower than the 0.2% in December and 1.5% a year earlier.
The CMRPI is based on 2012 constant prices, while the CMWPI is based on 2018 constant prices.
The PSA noted that residential had the highest number of constructions at 7,671 or 61.2% of the total number of constructions during the month.
However, this segment dropped 14.1% year on year. Residential projects were valued at P20.94 billion higher than the P16.35 billion in January 2024.
Single homes accounted for 89.5% of the residential category with approved permits contracting by 11.3% to 6,863.
Permits for apartment buildings fell by 35% to 708, while permits for duplex or quadruplex homes also went down by 13% to 80.
Nonresidential projects, on the other hand, slipped 4.3% to 3,138 from 3,278 from January 2024.
These projects accounted 25.1% of the total and were valued at P24.16 billion, 40.4% higher from a year ago.
Approved commercial constructions which made up 72.9% of the nonresidential category dipped by 3.1% to 2,288 from 2,362 in January 2024.
Institutional permits were also down by 0.6% to 480 while industrial permits fell 13.1% to 193.
Meanwhile, approved agricultural projects went down by 7.6% to 109 from 118 a year earlier. Other nonresidential projects contracted by 26.9 to 68 year on year.
Alteration and repair permits fell by 17% to 977 and were valued at P2.49 billion.
On the other hand, approved permits for additions, construction that increases the height or area of an existing building, surged 24.8% to 463 from 371 in January 2024.
Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) had the most approved building projects, accounting for 26.2% of the total, with 3,279 construction projects, followed by the Central Luzon (1,314 permits) and Ilocos Region (1,135 permits).
The PSA said construction statistics are compiled from the copies of original application forms of approved building permits as well as from demolition and fencing permits collected monthly by the agency’s field personnel from the offices of local building officials nationwide. — J.P.G. Villanueva
