MANILA: Finance professional Dayanara Lim spent two years trying to own a home in Metro Manila. She did not succeed.
The 31-year-old had saved for months before she signed a rent-to-own agreement for a 30sq m, one-bedroom unit in 2024. The plan was that she would pay 25,000 pesos (US$445) a month for two years, after which she would have to secure a bank loan to take full ownership of the unit.
“You have to sacrifice your lifestyle. You have to hustle. It’s not easy, but it’s doable,” Lim told The Straits Times. Then she paused.
“But this is already from someone earning more than the average Filipino income.”
In 2024, the average monthly income in the Philippines was 21,544 pesos, while the figure in Metro Manila was higher at 29,310 pesos.
But at the end of two years, she found she could not commit to servicing a bank loan while also contributing to increased financial support for her family. She is moving in May 2026 to a smaller flat at 28sq m, for a monthly rent of 18,000 pesos.
Under rent-to-own schemes in the Philippines, buyers typically pay monthly installments over two years, which go towards a down payment on the unit. At the end of the term, they must secure a bank loan to pay the remaining balance or forfeit the arrangement.
These monthly payments are usually higher than market-rate rent, meaning buyers who cannot convert lose both the premium they paid and the time they spent building equity.
Lim said she has no regrets about those two years, as she learned what she could afford, and what she could not. She still wants to own a home one day.
“It’s just a matter of where,” she said. “And who I’m with when I do it.”
With homeownership a pipe dream for many Filipino families, risky rent-to-own schemes have grown in popularity as a workaround, and are a sign of the scale of the affordability gap that economists have flagged in the market.
In March, the Economist cited Manila as one of the world’s most unaffordable housing markets, and referred to a 2025 report by the Urban Land Institute that compared household incomes with the cost of buying and renting in over 40 cities globally.
Median home prices should be no more than five times median annual income – and median monthly rents, no more than 30 per cent of median monthly income – to be considered “attainable”, according to the institute.
Condominium prices in the Philippine capital reached 19.8 times median annual household income in 2024, while townhouse prices were even more extreme at 33.4 times.
By comparison, Singapore’s public housing flats, which house around 80 per cent of the city-state’s population, were priced at just 4.3 times the median income. In Bangkok, condominiums stood at 20.3 times and apartments in Hong Kong, 23.4 times.
A problem made worse in the last decade
Economists and housing advocates say the crisis has been decades in the making, with property price increases outweighing income growth over the years.
The problem was exacerbated by the proliferation of online gambling firms about a decade ago. From 2015 and 2019, Metro Manila’s property market was flooded by a wave of such firms – known as Philippine offshore gaming operators, or POGOs – which set up operations in the capital to serve largely Chinese clientele based abroad.
The firms and their employees, most of whom were Chinese nationals, poured into the rental market, driving up prices across the city.
A 20sq m studio that rented for 15,000 pesos a month before the POGO boom jumped to 25,000 pesos to 30,000 pesos by 2019, according to Joey Bondoc, director of research at Colliers International Philippines.
Some local renters resorted to co-living arrangements just to remain near where they worked. During those years, pre-sale prices for condominiums – which tend to be less than after the development has been built – climbed at roughly 8 per cent a year, outpacing both wages and remittances.
In the Philippines, pre-sale schemes allows buyers to commit to a unit before it is built by paying low monthly instalments directly to the developer, typically at rates lower than commercial bank loans, before transitioning to full bank financing once the building is completed.
“The disparity is real,” said Bondoc. “And I’m not even talking about the luxury segment. That moves faster still.”
The POGOs were banned by President Ferdinand Marcos Jr in 2024 due to their ties to criminal syndicates, but authorities remain on the lookout for firms that may have gone underground.
Meanwhile, those price gains have since moderated, but the gap in ownership that they opened has not closed.
“Developers respond to speculative demand,” said Dr Marife Ballesteros, vice-president of the Philippine Institute for Development Studies. The investors driving that demand are not primarily foreigners, as Philippine law limits foreign ownership of condominium units to 40 per cent of any building, and prohibits foreign land ownership outright.
The buyers are mostly affluent Filipinos and overseas workers who treat property as a store of wealth rather than a place to live.
“Those who own and rent out units already have several houses,” Dr Ballesteros said. “They use real estate as a means to save, to store their wealth.”
That dynamic, she argued, is what keeps the market permanently tilted away from ordinary buyers. Developers build for investors who can pay, not for the millions of Filipinos who cannot.
“They don’t target socialised housing unless there is a government subsidy. And it’s not that they need the financing. They are very liquid, linked to banks, part of conglomerates. The issue is: it’s build and sell. If you can sell it quickly (to the highest buyer), that’s the objective,” she told ST.
Dr Ballesteros noted that studio units between 12 to 20sq m start at around five million pesos, a near-impossible sum for the majority of the workforce, who earn an average of 20,000 pesos a month.
“To service a five million-peso loan, you need an income of about 100,000 pesos a month,” she said. In the Philippines, this salary range is often enjoyed by mid to upper-level managers, doctors, lawyers, engineers, and IT professionals.
Those earning less are also more vulnerable when economic conditions shift.
In the lower mid-income segment – units priced between 3.6 million pesos and 7 million pesos – there were more buyers abandoning their pre-selling payment arrangements than those completing them in the first quarter of 2026.
As of March this year, there have been 2,024 backouts against 1,720 take-ups, Colliers’ 2026 figures revealed.
“On an annualised basis, 2026 take-up is projected to reach 8,000 units, well below the 22,000 units during the global financial crisis in 2009,” Bondoc said.
“This suggests that a (pre-selling) slowdown could persist if macro headwinds including the Middle East Crisis intensify.”
He said some buyers may have committed to pre-sale units years earlier, only to find that by the time bank financing was required, rising mortgage rates and stagnant incomes meant they could no longer afford to see the purchase through.
“It’s really because of the elevated mortgage rates. Usually buyers back out by the fifth year when it’s time for bank financing,” he said. He added that the trend was less pronounced in 2025, when easy lease-to-own terms temporarily lifted mid-income sales.
For lower-income Filipinos, the picture is even more dire, said Alicia Murphy, executive director of the Urban Poor Associates, a non-governmental organisation (NGO) assisting families living below the official poverty threshold – those with a household income of 12,000 to 15,000 pesos for a family of five, who make up about 15.5 per cent of the population.
Many are informal settler families, the term used in Philippine law for those occupying government or privately owned land without legal title. Under the law, they are entitled to relocation assistance rather than outright eviction, though advocates say this protection is inconsistently enforced.
Murphy said even when they are resettled, they often end up in provinces far from the city, where they depend on informal work in construction or domestic labour.
Subsidised housing to bridge the gap
The Philippine government does have a flagship housing initiative aimed at bridging the gap. Launched in September 2022, the National Housing for Filipinos programme aims to build 1 million housing units annually, with a target of 6 million homes by 2028 and an ambition of zero informal settlers by that year. It targets urban poor families, minimum-wage earners, overseas workers and government employees.
House-and-lot packages are priced up to 850,000 pesos and condominium units cost up to 1.8 million pesos. Beneficiaries finance these homes through a mandatory savings scheme for workers that functions similarly to Singapore’s Central Provident Fund.
As of May 2026, some 750,000 families have received affordable housing under the programme, which targets low-income families.
Among them are the informal settler families that Murphy’s NGO works with. In end-May, about 172 such families are set to move into condominium-style units. The units are modest but located within the capital, not too far from where they once lived as illegal settlers. It is a glimmer of hope for these families, who simply want a decent place to live.
“Housing as a basic right is in the constitution. It’s every Filipino’s right. It’s a safety net for every family. That’s why the government should work harder to ensure there’s decent housing for everyone,” said Murphy.
Bondoc called the government intervention “a good start”, but experts caution that this is still not enough.
The structural barriers have survived every previous reform effort, said Dr Ballesteros. Among the most stubborn is what economists call the land development multiplier, or the cumulative cost added to a housing unit between raw land and finished product, once permitting fees, utility connections and infrastructure requirements are factored in.
In the Philippines, housing experts say that multiplier is significantly higher than in comparable Asian cities. There is also no inclusionary zoning, a policy in many cities that requires developers to set aside units for lower-income buyers.
Without it, said Dr Ballesteros, the market remains entirely developer-led. Real estate wealth is also undertaxed, allowing multiple-property owners to profit from land without fiscal pressure that might otherwise push supply toward those who need it most.
“If you have politicians who are mostly from landed families and also involved in real estate development, it is actually difficult to push these policies,” she said. - The Straits Times/ANN
