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BSP's real estate price index to link different data.

The Bangko Sentral ng Pilipinas (BSP) Residential Real Estate Property Index (RREPI) which is expected to be released first quarter next year will weave important data to serve as one of the early warning signals for asset bubble formation.

BSP managing director for monetary policy sub-sector, Francisco G. Dakila Jr., said the RREPI will plug the gap in the BSP's statistical data when monitoring real estate prices and credit market conditions in the country.

"We really want to know price movements (and) before we could release this to the public, we need to scrutinize the results. So far, banks are cooperating," said Dakila.

The BSP is hoping the RREPI will be one of its valuable tools in assessing the real estate market. At the same time, the BSP said it also wants the property price index to "simultaneously guide" its assessment of trends in asset prices and the risk of bubbles in housing prices.

Banks' loan applications for real estate is one of the many information that the BSP is using in processing RREPI on a quarterly basis. It is also using what it called a preliminary RREPI which was based on construction materials and building permits. This is data they obtain from the Philippine Statistics Authority.

"There are some natural income accounts (that BSP) can use as well but it is not (a) dedicated (source)," said Dakila. "You'd want a dedicated index."

BSP officials insist there is no evidence yet of asset bubble formation. An asset bubble or the rapid rise of property prices triggered the 2007 and 2008 global financial crisis.

As of end-December 2014, banks reported P1.22 trillion worth of real estate exposures, higher compared to P1.16 trillion in the previous quarter (September, 2014). This data includes not only the big commercial banks, but also thrift banks and banks' trust departments.

For the last quarter of 2014, real estate loans accounted for 85.4 percent of total real estate exposures.


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Title Annotation:Opinions and Editorials
Publication:Manila Bulletin
Date:Sep 14, 2015
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