Weak growth, rising inflation and a sliding peso kept the Philippine property market under pressure in the third quarter of 2026. The economy grew just 2.3% in 2Q, inflation climbed back to 7.2%, and the BSP raised its policy rate to 5%. With prices stuck high and incomes lagging, many buyers are still priced out. But a proposed condominium redevelopment law could open a new path forward, especially for Makati's aging buildings.

The Philippine property market is dealing with 4 major pressures at once:

Slower growth: GDP grew 2.3% in 2Q 2026, the weakest since the pandemic
Higher inflation: prices rose 7.2% year-on-year in September
Higher borrowing costs: the Bangko Sentral ng Pilipinas (BSP) raised its policy rate to 5%
A weaker peso: PHP 63 to the US dollar as of October 15, 2026

Together, these keep property prices high, loans expensive and household budgets stretched. That makes it harder for people to buy and for deals to close.

There is a bright spot, though. Senate Bill 2420, the proposed Condominium Redevelopment Act, could make it much easier to redevelop old condominium buildings. In mature business districts like Makati, that could unlock valuable land now tied up in aging structures.

Economic growth hit a post-pandemic low

GDP growth slowed to 2.3% in 2Q 2026, down from 2.8% in 1Q. Outside the pandemic years, it is the weakest quarter since 2009.

Three factors are behind the slowdown: the aftermath of the flood-control scandal, the oil shock, and weak private investment.

Inflation is back up, and the BSP is still raising rates

Inflation reached 7.2% year-on-year in September, well above the BSP's 3% target. After easing to 6.4% in June, it has picked up again.

To fight inflation, the BSP raised its policy rate to 5%, its third hike, up from 4.75% in July. Markets expect another 25-basis-point increase, to 5.25%. A basis point is one-hundredth of a percentage point, so this would be a quarter-point rise. Two risks are pushing the BSP to act: El Niño, which threatens food prices, and the need to defend the peso against the interest rate gap with the US Federal Reserve.

For property, the message is clear: the easing cycle is over. Higher financing and living costs make it harder for people to buy, and condominiums take longer to sell.

A weak peso is pushing construction costs higher

The peso closed at PHP 63 to the US dollar on October 15, 2026, weaker than the PHP 61.42 recorded in early July and near historic lows.

The pressure is structural. It comes from a widening trade deficit, high oil costs tied to the Middle East conflict, and foreign investors pulling money out. A weaker peso makes imported building materials more expensive, so construction costs keep rising.

Three jammed levers are locking up the market

Three levers can usually ease the pressure on buyers: lower prices, lower interest rates or higher incomes. Right now, all three are stuck:

Prices are sticky. Construction costs, driven by the peso and imported materials, put a floor under prices.
Rates cannot fall yet. With inflation running hot, the BSP is holding firm.
Incomes are lagging. Wages are not keeping up, which widens the affordability gap.

The result is a market where many people want to buy but cannot. As long as all three levers stay jammed, affordability will continue to hold back transactions.

A proposed law could unlock old condominium buildings

Under the 60-year-old Condominium Act (RA 4726), redeveloping a condominium building requires every owner to agree. A single holdout can block a project, which has left many aging buildings stuck as they are.

Senate Bill 2420, the proposed Condominium Redevelopment Act, would replace that rule with approval thresholds based on a building's age:

Under 30 years old: unanimous approval
30 to 50 years old: two-thirds of stakeholders
50 years and older: a simple majority

The bill also includes:

Tax-free transfers of common areas to condominium corporations, exempt from both national and local taxes
Easier changes to the master deed, the document that defines a building's units and common areas, by simple majority of registered owners with approval from the Department of Human Settlements and Urban Development (DHSUD)
Limits on how much a unit's actual floor area can differ from what was sold: 6% for units of 60 sqm and below, down to 2% for units above 500 sqm
A required 90-day DHSUD inspection before a building's Certificate of Completion is issued

Makati is where the opportunity is biggest

About 28% of the 237 condominium buildings in the Makati CBD are more than 30 years old. Across the 2,090 buildings in the overall market, the share is only about 3%. In fact, Makati holds 93% of the market's condominium buildings over 30 years old.

If approval thresholds are eased, these buildings could be combined into larger sites, repositioned or redeveloped into higher-value properties. In a mature, built-up district like Makati, that is a significant opportunity.

Industry insight

"The current slowdown in real estate isn't a lack of appetite — it's jammed execution. High construction costs, elevated interest rates, and stretched purchasing power have temporarily locked the market. The demand hasn't vanished; it's simply waiting.
The Condominium Redevelopment Act could fundamentally change urban renewal. By lowering the voting threshold for older buildings, we can unlock prime land stuck in aging structures, turning underutilized assets into high-value redevelopment opportunities.
Rough market conditions don't eliminate opportunity; they reshape it. Between emerging income streams and policy reforms unlocking older urban supply, those who position themselves now will capture the next growth cycle." — Miggy Galvez, our Analyst of Investment Sales

Market outlook: what to watch in 4Q 2026

Near-term conditions remain challenging. Slower growth, high inflation, expensive borrowing and a weak peso will keep affordability as the main constraint on transactions.

What to watch:

Whether the BSP raises rates again, to 5.25%
Whether inflation cools from 7.2%
Where the peso goes from PHP 63
The progress of the Condominium Redevelopment Act

Over the longer term, regulatory reform may offer a release valve. The Condominium Redevelopment Act could make it practical to redevelop aging buildings while protecting unit owners. In mature CBDs like Makati, where a significant share of buildings is already over 30 years old, that opens the door to site aggregation, asset repositioning and higher-value redevelopment.

Know where the market is headed before it moves. Read our latest insights and download the full 3Q 2026 Philippine Property Market Report at leechiu.com/market-insights.