Backouts exceed take-up in mid-income housing segment in Q1 — Colliers

PRE-SELLING DEMAND in Metro Manila rose 765% in the first quarter from a year earlier, while backouts exceeded take-up in the P3.6-million to P7-million segment, according to Colliers Philippines.

“Backouts outnumber take-up in the lower mid-income segment,” Colliers Philippines Research said in its first-quarter property market report.

It said the imbalance is most pronounced in the P3.6-million to P7-million segment, where backouts reached 2,024 units, exceeding take-up of 1,720 units.

By contrast, other segments posted stronger demand. The affordable segment recorded 1,629 take-up against 728 backouts, while the economic segment saw 864 take-up versus 96 cancellations, according to Colliers. In the upper mid-income segment (P7 million to P12 million), take-up still exceeded backouts at 1,473 units against 1,228, although cancellations remained elevated.

Higher-end segments, including upscale and luxury, also posted more take-up than backouts, though volumes were relatively smaller.

Colliers said Metro Manila’s residential market remains under pressure despite the rebound in demand, with vacancy reaching 24.7% in the first quarter and projected to rise to 25.6% by end-2026.

The increase in cancellations reflects pressure on buyers amid elevated borrowing costs and rising prices, according to Colliers. Average mortgage rates stood at 7.8% in the first quarter, while inflation averaged 2.8% during the period, it noted, citing data from the Philippine Statistics Authority.

Colliers data also showed that economic and affordable segments accounted for a larger share of take-up.

However, unsold inventory remains elevated. Ready-for-occupancy units totaled about 27,900 in Metro Manila as of the first quarter, with a significant portion concentrated in the lower- to mid-income segments.

New supply is expected to add further pressure, Colliers said. Around 12,900 residential units are projected to be completed in 2026, which could weigh on vacancy levels and slow overall absorption.

Still, Colliers noted some improvement in market absorption, with inventory life declining to 6.8 years, the lowest in 18 months, indicating a gradual recovery in demand.

Colliers said the residential sector may continue to face headwinds, citing risks from higher oil prices, inflation and borrowing costs that could affect demand and project timelines. — Juliana Chloe A. Gonzales