What condominium cancellations reveal about temporary housing subsidies and the sustainability of homeownership
Roughly 9,000 condominium purchase cancellations and nearly 80,000 unsold units in Metro Manila raise a basic question about Philippine housing: are we producing homes that households can genuinely afford, or financing arrangements that only make expensive homes look affordable at the start?
According to Colliers Philippines, the 9,000 cancellations recorded in the first nine months of 2026 included about 5,200 units under construction and 3,800 ready-for-occupancy units. Colliers Research Director Joey Bondoc noted that many cancellations occur around the fifth year of payment, when buyers move from small developer installments to much larger bank-financed amortizations. In some cases, monthly payments reportedly jump from about ₱10,000–₱12,000 to ₱40,000–₱50,000.
High mortgage rates and the exit of demand tied to Philippine Offshore Gaming Operators (POGOs) have also weakened the market. Both explanations are sound: higher rates reduce borrowing capacity, and the POGO exit is a negative demand shock. Neither, however, answers the deeper question.
Why did so many purchases depend on financing that buyers could not sustain at turnover? And are we building the same vulnerability into government-assisted housing?
The Soft Entrance Mechanism
I use the term Soft Entrance Mechanism for any housing finance structure that lowers the initial burden of acquiring a home through low down payments, deferred principal, subsidized interest or temporarily reduced amortizations.
The mechanism is not inherently harmful. It can widen access to homeownership by easing genuine financing constraints. The problem arises when the introductory payment does not reflect what the household will owe for the rest of the loan.
Condominium pre-selling shows how this works. Buyers pay a small share of the price over several years, and the large balance falls due at turnover, usually through a bank loan. A buyer who can manage the installments may still fail to qualify for, or sustain, the mortgage needed to complete the purchase.
This is where the mechanism becomes a Soft Entrance Trap. The household enters the market under one affordability condition but must stay in it under another.
The Same Risk in Expanded 4PH
The Expanded Pambansang Pabahay para sa Pilipino (4PH) Program contains a financing structure that deserves the same scrutiny. Qualified borrowers obtain housing loans at a subsidized 3% annual rate for the first five years, which may be extended for another five years subject to conditions. The first 30,000 qualified borrowers under Pag-IBIG Fund’s Early Bird promotion may keep the preferential rate for ten years.
This differs from condominium pre-selling. One is a subsidized mortgage rate; the other is deferred financing of the purchase price. Yet both raise the same question: can the household carry the obligation once the introductory period ends?
The program’s aim is commendable, and lower rates do cut monthly payments. Pag-IBIG Fund reported that socialized housing units financed in the first nine months of 2026 rose to 10,904, from 3,987 a year earlier. That is a significant expansion. But loan approvals alone do not show that the resulting homeownership will last. A housing program should be judged not only when a family receives its loan, but also when the preferential rate expires.
What Happens in Year Six
Consider a hypothetical ₱1.8 million socialized housing unit financed over 30 years. At 3%, the monthly amortization is about ₱7,589. Suppose the remaining balance, about ₱1.6 million after five years, is repriced at an illustrative 7% and amortized over the remaining 25 years. The payment rises to about ₱11,311, an increase of roughly 49%.
| Period | Interest rate | Monthly amortization | Share of ₱30,000 income |
|---|---|---|---|
| Years 1–5 | 3% (subsidized) | ₱7,589 | 25% |
| Years 6–30 | 7% (illustrative) | ₱11,311 | 38% |
This is not a forecast of 4PH repricing. It illustrates the risk created when a temporary preferential rate gives way to a higher one. For a household earning ₱30,000 a month with unchanged income, the mortgage would go from a quarter of income to nearly two-fifths, before maintenance, insurance, utilities and transport.
Incomes may rise, the subsidy may be extended, and actual repricing depends on the loan agreement. These possibilities matter, but they should be built into the affordability assessment, not assumed to solve the problem. The question is not whether the first five years are affordable, but whether the household can sustain ownership for the full term.
Housing Need Is Not Effective Demand
Housing need is a social requirement. Effective demand is need backed by purchasing power. A household may need a home without the income to buy one at market prices, and a household may qualify for a subsidized loan without the capacity to carry it if terms change.
This distinction explains how the Philippines can have a large housing backlog while developers sit on thousands of unsold units. There is no contradiction: the housing being built may not match the incomes, locations or financial capacity of the households that need it.
Cheaper Credit Is Not Cheaper Housing
An interest subsidy lowers the cost of borrowing. It does not lower the price of the dwelling, raise household income or reduce the cost of producing housing. In effect, it increases how much eligible households can pay.
If supply responds with more homes at reasonable prices, access improves. But where supply is constrained by land prices, infrastructure, construction costs or regulation, part of the subsidy is absorbed into higher prices. Economists call this subsidy incidence: the intended beneficiary does not capture the full benefit, and developers and landowners may take a share.
This is not an argument against housing subsidies. It is an argument for pairing subsidized finance with policies that address the cost of housing production and the real capacity of beneficiaries. Otherwise, government raises what households can borrow without making the homes they buy any more affordable.
Public Financing for Unsold Condominiums
In September 2026, reports indicated that the Department of Human Settlements and Urban Development was preparing a modality allowing existing private condominium units priced at ₱3 million and below to be acquired through Pag-IBIG financing. The aim is to address both unsold inventory and limited access to affordable housing.
Offering suitable existing units at lower prices could help. But the policy must distinguish the developer’s inventory problem from the household’s affordability problem. An unsold unit does not become affordable simply because government-backed financing is attached to it.
The relevant tests are whether the price is appropriate, the location serves the household, condominium dues and maintenance are manageable, and the borrower can sustain the loan. Without these, public money could help absorb overpriced inventory while leaving the price-income mismatch intact. Any such arrangement should rest on independent valuation, transparent eligibility rules and rigorous assessment of repayment capacity.
Public housing finance should serve households’ housing needs, not serve as an exit route for unsold private inventory.
Three Tests of Affordability
Housing affordability should be judged on three linked dimensions:
- Price affordability: whether the acquisition price is reasonable relative to household income and resources.
- Financing affordability: whether the household can qualify for and service the loan under its terms.
- Long-term affordability: whether the household can carry the full cost of ownership for the entire term, including after subsidies expire.
The Soft Entrance Mechanism mainly addresses the second test, and only during the introductory period. It becomes a trap when entry is made affordable without assurance on the third.
Three safeguards follow. Loan qualification should test repayment capacity under plausible future rates, not only the subsidized amortization. Beneficiaries should receive illustrative amortization schedules showing what they would pay under alternative rates once the subsidy ends. And government should track delinquency, restructuring, foreclosure and continued ownership after the subsidy period, which says far more about program performance than loan approvals and takeouts.
Lessons for Cebu and Other Growing Cities
The implications reach beyond Metro Manila. Cebu and other fast-urbanizing cities face rising land prices, transport costs, uneven access to jobs and limited household purchasing power. More residential construction does not improve affordability if the units are beyond the reach of the people who need them, and more mortgage credit cannot substitute for sound urban planning, well-located housing, efficient infrastructure and lower production costs.
Housing affordability is not only a banking problem. It is a problem of land economics, household income, urban development and the allocation of scarce resources.
Solving the Problem or Postponing It?
The condominium cancellations are a timely warning about financing that makes housing accessible at entry without making ownership sustainable. Expanded 4PH has an important objective, and its subsidized rates can greatly benefit lower-income borrowers. But temporary financing assistance should not be mistaken for a lasting solution to affordability.
The policy challenge is to ensure that household capacity holds for the whole mortgage term, not just the years when government keeps payments low. A housing program should be judged not by how many families become homeowners today, but by how many remain homeowners tomorrow.
Otherwise, we risk trading one housing problem for another: from households unable to buy homes to households unable to keep them.
Augusto B. Agosto, DLVM, MA Economics, JD, EnP, is an economist, environmental planner, licensed real estate consultant and appraiser, and law scholar based in Cebu. A Housing Specialist and Consultant with the Asian Development Bank (ADB), he is President and CEO of AA+ Appraisal & Consultancy, Inc. and Founding President of the Society of Litigation Valuers (SOLVE). He writes and lectures on land economics, housing finance and valuation.
