By Isa Jane D. Acabal, Researcher
THE NUMBER of approved building permits fell to an over six-year low in August, as elevated borrowing costs, slower economic activity, and weather disruptions dampened construction activity, analysts said.
Preliminary data from the Philippine Statistics Authority showed construction projects covered by permits fell by 31% in August to 10,968 from 15,888 a year earlier.
The slump was a reversal from the 8.6% growth in August 2025, and 4% in July.
This also marked the lowest number of approved construction permits in over six years or since the 4,725 recorded in May 2020.
Month on month, this was 34% lower than the 16,725 permits approved in July.
Construction projects covered 2.55 million square meters (sq.m.) of floor area in August, 42.7% lower than 4.44 million sq.m. in the previous year.
These projects were valued at P39.22 billion, down 38.9% from P64.16 billion a year ago.
Jamie Dela Cruz, a research manager at Savills Philippines, said the sharp decline in the approved building permits in August reflects the cautious stance of developers and property owners to new construction projects.
“Higher construction costs, financing expenses, and uncertainty over the pace of economic growth can affect project timing and investment decisions. Some developers may also be reassessing their plans based on actual demand and existing property inventory,” she said in a Viber message.
Ms. Dela Cruz noted the decline in both the number of permits and the total floor area “suggests that fewer projects were approved and that the overall scale of planned construction was smaller.”
Colliers Director and Head of Research Joey Roi Bondoc said the rising prices of construction materials, mainly due to the Middle East war, are a major concern of developers.
Cid L. Terosa, an associate professor at the School of Economics of the University of Asia and the Pacific, said elevated construction costs may have pushed developers to downsize projects.
“High financing costs induced both private homebuyers and corporations to pause or begin residential and nonresidential projects. Elevated prices and financing costs weakened household demand, reducing mid to low tier residential applications,” he said in an e-mail.
Mr. Terosa also noted bad weather in August “may have dampened construction operations and led to administrative processing delays and backlogs.”
“The country’s weak economic growth and slower investment also weighed on construction activity,” Ser Percival K. Peña-Reyes, a senior research fellow at the Ateneo Center for Economic Research and Development, said in a Viber message.
Mr. Peña-Reyes added that the uncertainty surrounding government infrastructure spending also dragged construction activity in August.
Approved permits for residential buildings, which accounted for 57.9% of the total number of projects, plunged by 40.7% to 6,355 in August from 10,712 a year ago.
These projects totaled P16.86 billion, 23.7% lower than P22.11 billion a year earlier.
Single houses, which made up 86.6% of residential construction, fell by 33.6% year on year to 5,501 in August, while apartments declined by 62.1% to 701 and duplex or quadruplex houses dropped by 80.8% to 103.
“For residential construction, the decline may reflect continued challenges in housing affordability, as well as developers being more selective about launching projects,” Ms. Dela Cruz said.
“Buyers remain sensitive to property prices and borrowing costs, making it important for developers to align new supply with the purchasing capacity of their target markets,” she added.
Mr. Terosa said elevated inflation and higher financing costs weakened demand for residential projects.
Nonresidential building projects, on the other hand, slid by 6.2% year on year to 2,921 in August from 3,114 last year. These accounted for 26.6% of the total number of approved construction permits.
The total value of these projects amounted to P19.35 billion, down 35.2% from P29.87 billion in August 2025.
The bulk or 64.7% of nonresidential building permits are for commercial buildings, which saw an 8.4% drop to 1,891 from 2,065.
Institutional building projects rose by 14.6% annually to 619, while industrial construction projects declined by 10.9% to 237.
Agricultural projects slipped by 5.6% to 135 permits, while other nonresidential construction projects fell 61% to 39.
Ms. Dela Cruz said the drop in nonresidential building permits suggests that businesses and investors are taking a more measured approach to expansion given economic uncertainty.
Approvals for addition, or any new construction that increases the height or area of an existing building, dropped 12.8% year on year to 407. Permits for alteration and repairs slid by 28.2% to 837.
By region, Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) posted the highest number of approved building permits at 2,283, accounting for 20.8% of all permits. This was followed by Central Visayas with 1,082 permits (9.9% share) and Central Luzon with 1,014 (9.2%).
“Demand from the industrial, retail, and hospitality sectors will accelerate in the coming months, as these sectors are aggressively pursuing expansion opportunities,” Mr. Terosa said.
“Public construction will be boosted by government spending. Traditional private residential demand will remain muted and defensive, with inflation and income uncertainties holding back purchase decisions,” he added.
Meanwhile, Mr. Peña-Reyes sees a “cautiously optimistic” outlook for construction activity with an uneven recovery.
“The recovery will depend on how quickly infrastructure projects move forward, whether investor confidence improves, and whether households regain spending power,” he said.
Ms. Dela Cruz also expects construction activity to remain uneven in the near term as developers weigh in market conditions, project costs, and demand.
“A sustained recovery will depend on improved business and consumer confidence, more accessible financing, and greater certainty around economic growth and infrastructure development,” she said.
“We will be watching the next few months’ permit figures to determine whether August represents a temporary slowdown or a more sustained moderation in construction intentions,” she added.