Housing can raise Pinoys to the middle class

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Housing can basically increase more incomes for more people in a more sustainable manner than most government programs. Also easier because it requires less sustained hard mental or physical exertion after purchase and offers more people a more constant increase in value with less risk than other programs. The vast majority of home-buying apprentices and scholars in the agriculture, manufacturing, carpentry, construction, craft, home improvement, tourism, education, and other sectors testify that by the end of their careers, most of their retirement nest is worth of eggs comes more from their home than from their pensions, savings, or businesses they have invested in. Not only will this asset work for them, but it can be a capitalization for their next generation.

Yet the recent Filipino direct allocation of P3.975 billion to housing companies from a P4.5 trillion budget, or about 0.08 percent, is just too little. To reverse the growing homeless population, more resources must be made available to this industry. Even if it is fully allocated to housing construction with no administrative overhead, with a backlog of over 6 million this can only produce fewer than 10,000 homes.

Regulatory requirements from various authorities are constantly being added and changed – including those relating to technology, security, space requirements, money laundering monitoring and accreditations. The recruited specialist staff is also increased and the upper price limits are not adjusted accordingly, even reduced piece by piece. This pressure – at the bottom end of housing production – has resulted in an ever widening gap between the supply and demand of our population, which is projected to reach 8 million in a few years.

Over 90 percent of the Filipino population needs assistance to get their first residence, which is the first step towards entering the middle class. In all countries of the world, this is primarily recognized as a core state task that is supported by partnerships with the private sector – it can only be “supported”, not transferred.

This is the best time to massively accelerate home production and home ownership to get more low-income people into the fixed asset side of the economy at the earliest possible opportunity. Big inflation is expected as the world becomes inundated with printing dollars, resulting in spikes in consumption without corresponding production. Another reason to prioritize this sector as soon as possible is because it is an economic catalyst, the impact of which is generally estimated at a 3 to 4.5 fold multiplier, a great way to revitalize the economy faster.

Without much more affordable housing, Filipino low-income households will be delayed by the coverage they could get in this current higher-cost trend, and some will lose their ability to purchase altogether. Not only will they suffer as well as benefit from these financial factors, but also social benefits for their children and the community. The government will have to spend more on police, maintenance, health services and poverty relief or fail to create new urban centers and businesses that might otherwise develop earlier.

Home ownership has been shown to lead to more peace and order, educational outcomes for children, accelerated economic development and more citizen participation. The benefits are particularly strong for low-income households.

It is the greatest wealth accumulation over time for the vast majority of families in all countries, not only because it is forced saving, but it also forces maturity in decision-making and management, and it enables leveraged participation in development a community and is a ride against inflation – provided the purchase is an end-user and not speculative.

Housing is an important part of development planning and government policy in many successful developing countries. It is usually carried out as part of a city-wide planning that not only includes housing, but also the infrastructure for access to institutions, services and companies in an area.

Singapore, which is known to have grown from a Third World to a First World country with a GDP per capita of $ 65,640 in 2019 (versus the Philippines around $ 3,500 per capita in 2019). The newborn government of Singapore built 55,000 homes in its first five years as part of its core strategy, more than the colonial government in 30 years. Government Housing and Development Board apartments are now occupied by 8 out of 10 residents who used housing and a core strategy now seen as “unique national identity and collective experiences … for social stability and economic growth”.

In Hong Kong and in major US cities, the uncontrolled housing shortage has become a source of political and social unrest. Now that China has essentially housed the entire population, as part of its development strategy, it is building housing along with infrastructure as part of its development strategy. This is seen as both a cause and a consequence of rising incomes, although there are problems with the location of desired units, high prices and development, which the government is now actively managing.

Streamlined incentives and processes will go a long way in reaching more home-owned families, which is a recognized key to economic growth with citizen participation. But this additional production cannot be enforced by upper price limits which normal business cannot achieve in the long term, or even which cannot be reached by the state.

After some housing debacles in the 1990s and 2010, state regulators were able to work with stakeholders to grow the industry without major incidents. The Housing and Land Use Regulatory Board (HLURB) has been monitoring the situation to ensure that there has not been any major breakdowns or fraud. The Pag-IBIG Fund has adjusted its rules to allow more access while protecting funds so that it has grown significantly in terms of income and portfolio size, although there are procedural disagreements that need to be worked on. The Anti-Red Tape Authority (ARTA) has also helped expedite processes and cases.

The various housing and finance authorities related to housing construction were eventually brought together under the Department of Settlements and Urban Development (DHSUD), which was founded in 2019 under Secretary Eduardo del Rosario, who is in constant discussion with the various stakeholders and his team Balance the differences in interests, including those of homeowners, vendors, associations, and the government.

Our government can unlock tremendous value through the housing industry and accelerate the recovery and development of the Philippines. The incentive-driven production of the affordable housing sector and the rationalization of the specifications and requirements of some agencies are urgently needed measures to increase production quickly, the benefits of which are greatly enhanced when implemented sooner rather than later. Private actors would also do well to coordinate closely with the government.

We’re behind Asean in the economy, but if we make housing more priority it will allow for a much faster catch-up process and more people will benefit sooner.

Our goal in the arrears must not just be to continue, but to skip!

The New Worlds by Integrated Development Studies Institute aims to present frameworks based on a balance between economic theory and historical realities, and to establish success in real businesses and communities. ([email protected]).


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