The condominium market in Metro Manila faces a growing challenge, with oversupply reaching an equivalent of 34 months as of November, driven by a surge in backouts and a mismatch in supply and sales, according to Leechiu Property Consultants (LPC).
Factors Behind the Oversupply
Roy Golez Jr., LPC’s Research and Consultancy director, explained that while 4,000 units were added to the market and an equal number sold, 6,000 backouts pushed the oversupply up from 29 months in the third quarter.
“It will take 34 months to sell the current inventory at the prevailing pace,” Golez noted. The market standard for healthy inventory is a maximum of 12 months.
He added that the backouts primarily stem from buyers unable to complete payments.
“During turnover, buyers are asked to settle the balance, typically 80%. If financing isn’t secured, the sale does not push through,” Golez explained.
Market Trends
From October to November, developers launched 4,971 new units, but only 4,375 units were sold, reflecting the current challenges.
Year-to-date, 25,565 condominium units have been sold, accounting for 63% of 2023 figures. Project launches, however, halved compared to last year, totaling just 13,226 units.
External Factors Impacting Sales
Golez attributed the oversupply to:
- High interest rates limiting financing options.
- Shifts in buyer preferences toward single-detached homes or properties outside Metro Manila.
- Economic uncertainties influencing decision-making.
Outlook for December
When asked if oversupply could worsen in December, Golez stated that historical trends provide no clear answer.
“We analyzed previous years but found no consistent pattern for December,” he said.
The condominium market remains in flux as developers and buyers navigate economic and financial challenges.