Inflation Rates Continue to Threaten Housing Industry Rizal Commercial Banking Corporation The Philippine housing industry is at risk as inflation rates continue to threaten the market. The Bangko Sentral ng Pilipinas (BSP) has raised concerns that the current rate of inflation could harm economic growth and disrupt the country's overall development plans. The inflation rate increased to 5 percent this June 2022, which could lead to stagflation, a situation where prices are high and there is low economic growth. This would be a significant setback for the housing industry, which has seen modest growth in recent years. The Monetary Policy is the main tool that the BSP uses to adjust inflation. They focus on Inflation Targeting when the central bank sets a target inflation rate and uses monetary policy to influence economic activity so that the inflation rate remains at the target. Many times, the monetary policy is in the form of changing interest rates. BSP Taking Action To address this issue, Governor Benjamin Diokno stated that BSP will take policy action to lower the inflation rate back to its target of 2 to 4 percent. However, this will not be an easy task given the current global economic conditions. The Suffering Housing Market The housing market is vital to the Philippine economy as it employs millions of people and provides shelter for families. The current inflation situation threatens the industry's stability and could lead to a decrease in home loan approvals, which would further harm the market. Home prices have already been rising in recent years, making it difficult for many families to buy a house. The COVID-19 pandemic has exacerbated the inflation situation as the global economy has been disrupted. But home buyers are taking advantage of the situation as prices are expected to rise even further. Many people rush to buy homes before inflation gets out of control. While this could be a good short-term strategy, it is not a sustainable solution to the housing crisis. Real estate investors may be the only ones who benefit from the current inflation crisis. They can purchase property at a low price and then sell it at a higher price when inflation rates start to stabilize. But for the majority of people, the current inflation crisis is a cause for concern. Taking Advantage of the COVID- 19 Pandemic It is unclear how the current inflation crisis will play out in the coming months. The BSP is confident that it can lower the inflation rate back to its target, but this will be a difficult task. The housing market is already suffering, and the COVID-19 pandemic has worsened the situation. Home buyers should be cautious in the current market and be prepared for possible price increases. The Situation Going Forward https ://psa .gov .ph/content/summary- in f la t ion-report - consumer-pr ice- index-bot tom-30- income-households- 2012100- june-2022 ht tps ://www.b loomberg .com/news/ar t i c les/2022-06- 23/phi l ipp ines- ra ises-key-rate-on- in f la t ion-r i sks-peso- s lump https ://www.bsp .gov .ph/Media_And_Research/Learn ing%20 Mater ia ls/Q32019 .pdf ht tps ://www.rcbc .com/home- loans ht tps ://bus iness . inqu i rer .net/353271/t ime-to-get- rea l - estate- in- f ight ing- in f la t ion References :