RISING living costs, a sharp contraction in public works spending and slowing economic growth are weighing heavily on property development, Senate President Sherwin Gatchalian said as fresh Senate hearings and budget deliberations underscore the broader economic impact of the downturn.
Speaking at the Manila Overseas Press Club, Gatchalian said gross domestic product growth slowed to 2.3 percent in the second quarter, from 5.4 percent a year earlier, marking the weakest growth outside the pandemic since 2017.
The slowdown prompted major rating agencies and multilateral lenders, including S&P Global Ratings and the Asian Development Bank, to cut their full-year growth forecasts to below 3.5 percent.
Gatchalian cited the 32-percent contraction in public works construction in the second quarter as a major drag on economic activity. He said spending freezes and project delays following corruption investigations into public flood control programs have disrupted infrastructure activity and stalled development projects along major growth corridors.
He said recent Senate hearings and updated macroeconomic estimates placed the economic losses and opportunity costs linked to the disruptions at about P2.75 trillion since mid-2025. The halt in regional civil works froze land development momentum and stalled planned commercial buildouts in growth corridors.
The infrastructure slowdown coincided with weakening household purchasing power. Inflation accelerated to 6.1 percent in August amid energy price shocks linked to the conflict in the Middle East, with diesel prices reaching as high as P153.70 per liter and gasoline P96.50.
Real household consumption growth consequently slowed to 2.8 percent, making consumers more cautious about taking on long-term financial obligations, including home mortgages.
The macroeconomic friction outlined by Gatchalian corresponds with industry data indicating a real estate slump. Bangko Sentral ng Pilipinas data showed nationwide residential property price growth slowing to 0.4 percent in the second quarter, the weakest pace since the central bank began tracking the measure in 2019. Home values outside Metro Manila also contracted by 2.7 percent, prompting major real estate firms to put on hold project launches.
Gatchalian said Senate budget reviews flagged 7,000 proposed public works projects due to incomplete site documentation, while the proposed budget for flood control was slashed to P107.4 billion, its lowest since 2019.
The senator called for the fast-tracking of priority legislative measures to stimulate economic recovery, including the Masterplan for Infrastructure and National Development bill, a proposed 30-year roadmap to restore infrastructure predictability and tax relief initiatives aimed at rebuilding disposable household income.
