By Juliana Chloe A. Gonzales, Reporter
PHILIPPINE property developers are offering longer payment terms and financing incentives instead of cutting condominium prices, as high mortgage rates and a record inventory of unsold units weigh on residential sales, property consultants said.
Mortgage rates of 7.7% to 7.8% have made home purchases less affordable, prompting prospective buyers to delay purchases or seek more favorable financing deals.
“We do not necessarily see developers broadly adopting outright price reductions, particularly for projects that have already been selling for some time,” Dino Palanca, head of research at Savills Philippines, told BusinessWorld via Viber.
“Instead, we are seeing pricing adjustments take other forms, such as extended in-house payment terms, for example, a 15% downpayment spread over 60 months or more, sometimes at zero interest,” he added.
Developers are reluctant to reduce advertised prices because doing so could undermine property values and upset buyers who purchased similar units at higher prices.
Leechiu Property Consultants, Inc. Associate Director for Research Sharon Roset-Saclolo said developers are offering promotions and flexible payment terms on selected projects instead of implementing broad price cuts.
Colliers Philippines Research Director Joey Roi Bondoc said developers risk alienating existing buyers if they cut prices on unsold units within the same project.
He cited a hypothetical case in which a buyer who paid P5 million for a condominium would be dissatisfied if an identical unit were subsequently offered for P4.5 million. “Of course, the other person will be mad because the price dropped by P500,000 in a day,” Mr. Bondoc said by phone.
Developers instead extend downpayment periods or introduce lease-to-own arrangements to attract buyers without reducing advertised prices, he added.
Price reductions are more evident in the secondary market, where individual owners have greater flexibility to negotiate.
Mr. Bondoc cited completed condominium units on the fringes of Makati whose asking prices of P8 million had been negotiated down to P4 million.
Metro Manila’s inventory of unsold condominium units reached a record 82,900 in the first half, equivalent to about 34 months of supply across 616 actively selling buildings, Leechiu Property data showed.
Ready-for-occupancy inventory reached 37,000 units after 10,000 units were completed in the second quarter.
Residential take-up hit 14,500 units in the first half, up 6% from a year earlier, while project launches increased 18% to 4,900 units.
Leechiu Property said developers were conserving capital, slowing expansion, and prioritizing the sale of completed inventory over launching additional pre-selling projects.
“Financing will always be one of the biggest considerations for residential buyers, as the monthly amortization ultimately determines whether a client is comfortable moving forward,” Mr. Palanca said.
He said buyers were placing greater importance on affordability than potential increases in property values.
“This suggests that buyers have not necessarily disappeared from the market,” Mr. Palanca said. “They have become more selective about what they buy, where they buy and just as importantly, how they will finance the purchase.”
Ms. Roset-Saclolo said demand remained more resilient than expected despite economic uncertainty and higher borrowing costs.
Leechiu Property had expected weaker sales amid war in the Middle East and rising oil prices, but demand continued to increase in the second quarter.
Ms. Roset-Saclolo said buyers appeared willing to transact when developers offered sufficiently attractive incentives, suggesting that resistance to asking prices remained a significant obstacle.
Buyers with sufficient cash were also becoming more selective, assessing properties based on their perceived value rather than unit size alone, she added.
The Iran war has also weighed on sentiment among households dependent on overseas Filipino worker remittances, prompting some to postpone major purchases.
Remittances, which rose 1.9% year on year to $3.24 billion in July, are likely to remain subdued until yearend as overseas deployment slows and renewed hostilities in the Middle East create more volatility, according to some banks.
Mr. Bondoc said demand had shifted toward economic and socialized housing priced at P2.5 million or less, reflecting stronger interest from buyers seeking homes for their own use rather than investment.
“What segment helped to fill that void is the economic and socialized housing segment,” he said. “That is an indicator of the end-user demand rather than the speculative investor demand taking over.”
The state-controlled Home Development Mutual Fund or Pag-IBIG Fund increased its housing loan ceiling to P10 million to expand financing options for mid-market homebuyers.
The fund’s socialized housing loan releases more than doubled to P6.7 billion in the first half of 2026, supported by a promotional interest rate of 4.5%.
The rate translates to monthly payments of P12,667 on a P2.5-million housing loan under the applicable financing terms.
Ms. Roset-Saclolo cautioned that the increase in residential take-up did not necessarily signal a sustained market recovery because unsold inventory remained elevated.
“The slowdown is really the norm,” she said. “We don’t see the strength in demand as a signal that the market is really strengthening. We’re not there yet because the level of supply remains very high.”
She said potential increases in Bangko Sentral ng Pilipinas policy rates could push commercial bank mortgage rates higher, further constraining buyers’ financing capacity.
Leechiu Property said the country’s longer-term housing prospects remained supported by a median population age of 26.6 years, remittance inflows and mortgage debt equivalent to less than 5% of gross domestic product.
Regulatory changes could also affect housing supply and project financing.
The Department of Human Settlements and Urban Development and partner agencies are seeking to reduce developer permit approval times by as much as 50% under a joint circular.
The department also revised its temporary license-to-sell rules, requiring proceeds from pre-selling activities to be held in escrow until developers obtain regular licenses.