Philippine condo developers offer softer payment terms as unsold inventory rises

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Condo developers soften terms

Highlights

Metro Manila's unsold condominium inventory reached a record 82,900 units in H1 2024, equal to 34 months of supply, despite a 6% rise in residential take-up.
Developers are avoiding broad price cuts, instead offering longer in-house payment terms and lease-to-own options as mortgage rates stand at 7.7% to 7.8%.
Demand is shifting toward economic and socialized housing priced at P2.5 million or less, with Pag-IBIG Fund raising its loan ceiling to P10 million and doubling socialized loan releases to P6.7 billion in H1 2026.

Financing incentives replace broad price cuts

As reported by BusinessWorld Online, developers in the Philippines are avoiding widespread condominium price reductions even as mortgage rates of 7.7% to 7.8% make home purchases less affordable and encourage buyers to delay decisions. Property consultants say builders are instead stretching in-house payment terms, including downpayment schemes spread over 60 months or longer, sometimes at zero interest.

Savills Philippines Head of Research Dino Palanca says developers are not broadly adopting outright price cuts, especially for projects that have been on the market for some time. He says pricing adjustments are taking other forms because lower advertised prices could weaken perceived asset values and upset earlier buyers who paid more for similar units.

Leechiu Property Consultants Associate Director for Research Sharon Roset-Saclolo says promotions and flexible payment structures are being applied to selected projects rather than across entire portfolios. Colliers Philippines Research Director Joey Roi Bondoc adds that cutting prices on unsold units within the same development risks alienating existing buyers, making lease-to-own options and extended downpayment periods more attractive tools for closing sales.

Price reductions are more visible in the secondary market, where individual owners have greater room to negotiate. Bondoc points to completed condominium units on the fringes of Makati whose asking prices of P8 million have been negotiated down to P4 million.

High supply keeps pressure on the housing market

Metro Manila's unsold condominium inventory reaches a record 82,900 units in the first half, equal to about 34 months of supply across 616 actively selling buildings, based on Leechiu Property data. Ready-for-occupancy stock reaches 37,000 units after 10,000 units are completed in the second quarter, even as residential take-up rises 6% from a year earlier to 14,500 units and project launches increase 18% to 4,900 units.

Leechiu says developers are conserving capital, slowing expansion and prioritizing the sale of completed inventory over new pre-selling launches. Palanca says buyers have not disappeared, but are becoming more selective about location, product and financing, with affordability now carrying more weight than potential gains in property values.

Roset-Saclolo says demand remains more resilient than expected despite economic uncertainty, higher borrowing costs, war in the Middle East and rising oil prices. Still, she cautions that stronger take-up does not yet signal a lasting recovery because supply remains high, while potential increases in Bangko Sentral ng Pilipinas policy rates could push commercial mortgage costs higher and further limit financing capacity.

Demand is also shifting toward economic and socialized housing priced at P2.5 million or less, reflecting stronger end-user demand than speculative investment demand, according to Bondoc. The state-controlled Home Development Mutual Fund, or Pag-IBIG Fund, has raised its housing loan ceiling to P10 million, while its socialized housing loan releases more than double to P6.7 billion in the first half of 2026, helped by a promotional interest rate of 4.5%.

Longer term, Leechiu says housing demand remains supported by the country's median age of 26.6 years, remittance inflows and mortgage debt of less than 5% of gross domestic product. At the same time, regulatory changes are poised to affect future supply and financing, with the Department of Human Settlements and Urban Development and partner agencies seeking to cut permit approval times by as much as 50%, while revised temporary license-to-sell rules require pre-selling proceeds to be held in escrow until regular licenses are secured.

Our earlier article on Bangko Sentral ng Pilipinas (BSP) tightening expectations explained how money-market yields were edging higher as investors priced in another 25-basis-point policy rate hike. It also highlighted that elevated inflation and the BSP’s liquidity-absorbing operations were keeping financing conditions restrictive, reinforcing upward pressure on borrowing costs across the economy.

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