PUNCHLINE
Ike Señeres
It is a common
practice in many developed countries to gather and report the “housing starts”
data, meaning the number of new houses that are built in a given year. This
data is used as an indicator of how good or bad the economy is for the year
that is reported, based on the premise that the housing industry is one among
several industries that would drive national economic growth by way of creating
new jobs and creating a bigger demand for housing materials. It seems that here
in the Philippines, “housing starts” data is not being gathered and is not
reported, thus there is no growth indicator for us to use.
Common sense would
tell us that there would always be a high demand for new houses, and people
would buy them provided that the developers would offer good quality and a good
price, meaning at a price that people could afford. In actual practice however,
it is not really the selling price that matters, but the amount of the monthly
amortization that is spread out over a reasonable number of years. In theory,
anyone could actually afford a Mercedes Benz, provided that the payment period
is long enough for the amortization to be spread out. This is the same argument
that I would like to use in the case of housing, that anyone could actually
afford a quality house if the amount of amortization is affordable.
To their credit, Hong
Kong and Singapore have long ago implemented a house financing program that
could best be called “trans-generational” or TG for short. The idea behind TG
is very simple. Housing mortgages are passed on from one generation to another,
over several generations as a matter of fact. As it happens, the next
generations are able to take over the mortgages from their parents, as they
become economically productive on their own. Given the fact that this program
has worked for these two robust economies, I would even say that they have
actually solved two problems with one solution, because they have solved their
housing problem will at the same time they have also boosted their economies.
I have been exposed to
housing issues from the time that I was connected with the old Ministry of
Human Settlements (MHS) until now. I remember that during the time of MHS, many
families were able to avail of the housing programs because these were
affordable, at qualities that were acceptable given the national standards at
that time. Proof of that is that most if not all of the MHS housing projects
are still standing up to now. Looking back, it is very clear that the secret to
the success of MHS was its capability to understand the difference between
social housing and social pricing.
Going back to my
example about the Mercedes Benz, very few people could afford it if it is sold
on a cash basis at regular prices. More people could afford it however, if it
is sold on an installment basis over many years, at discounted prices. I think
the problem in the housing industry now is that there is no middle ground,
because very expensive houses with very high qualities are being sold at the
high end, and lower quality houses are being sold at the low end at prices that
are still relatively high, relative of course to the paying capacity of the low
income buyers.
Some local buildings
have already been certified as being compliant with Leadership in Energy and
Environmental Design (LEED) standards. That is good, but so far, all of these
buildings were built for the upscale market. None so far has been built for the
midrange and lower end markets. This should become a challenge for our housing
agencies, how to make available to everyone what is now available only for
those who are very rich. As I understand it, LEED compliant buildings are
already energy efficient and are also environmentally friendly, but are generally
not yet fully automated and connected.
To my knowledge, the
UP Employees Housing Cooperative (UPEHCO) is the only organization in the
country so far that has successfully built and sustained a cooperative housing
project. I am very much interested in cooperative housing as a business model,
and I believe that this is the only way to make access to housing more
democratic and pervasive in our country. The capability to access affordable
housing is only one side of the opportunity, the other side is the capability
to save money on the cost of living expenses within the housing project.
Using technology, it
is highly possible to bring down the cost of utilities and other basic
necessities within the housing project. On one hand, designs for cooler
buildings would reduce the costs of electricity. On the other hand, these
buildings could also generate their own sources of electricity and cooking
fuels, thus adding more savings. As a matter of fact, these buildings could
also filter their own water, so that residents need not buy water in expensive
bottles. These are just some ideas, the bottom line is that the cooperative
that owns the building could make more money from the commerce within, more
money that they could make from the building construction.
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