The Metro Manila residential property market is showing early signs of renewed momentum. In the third quarter of 2025, buyer activity picked up while available inventory continued to trend lower—indicating a gradual return to balance. However, affordability and modest rental yields continue to temper buyer appetite, especially among middle-income households.

Stronger Demand and Cautious Optimism

Economic fundamentals continue to support housing demand. The country’s GDP expanded by 5% in the first half of 2025, while overseas Filipino remittances grew by 3.1% year-on-year—both strong indicators of underlying market resilience.

Developers are approaching the recovery with measured confidence. New project launches rose by just 0.3% quarter-on-quarter to 1,766 units, suggesting a focus on clearing existing inventory. Buyer take-up, however, reached a seven-quarter high of 7,713 units, boosted by easing interest rates and improving sentiment.

Inventory Levels Begin to Normalize

Metro Manila’s available residential inventory fell to 31 months of supply, down from 37 months in the previous quarter. This decline suggests that the market is moving closer to equilibrium, though further absorption will be needed to sustain the recovery.

Interestingly, most of the momentum came from the upper middle to luxury segments, which saw strong sales growth. The middle-income bracket, by contrast, continues to face significant affordability challenges—limiting broader participation in the market.

Rental Market Still Adjusting

The rental segment remains in a correction phase following the exit of Philippine Offshore Gaming Operators (POGOs). Most districts recorded continued declines in lease rates, except for Ortigas–Mandaluyong, which saw a 2% quarter-on-quarter increase. This indicates a slow, uneven recovery across key locations.

A case study of a ₱7.6 million studio unit in Makati shows that rental income can eventually offset the financing costs of ownership over the life of a loan. While interest payments are gradually covered, buyers must still prepare for principal payments, underscoring the need for prudent financial planning in property investments.

The Affordability Gap Widens

Since 2019, prices for a sample Makati condominium unit have risen by 38%, while average family income has grown by only 15%. This widening gap reflects a broader global trend—seen in markets like the U.S. and Australia—where housing prices are increasingly outpacing income growth.

“The market is gaining traction with encouraging signs of recovery. Take-up has reached a seven-quarter high, and inventory levels are trending toward lower months-supply. But while the market is moving in the right direction, most of the available inventory remains out of reach for the average Filipino household. Addressing this affordability gap is essential to ensure inclusive growth in the residential sector.” — Roy Amado Golez Jr., Director for Research and Consultancy at Leechiu Property Consultants

Looking Ahead

The road to full recovery will depend on how effectively developers and policymakers address affordability constraints. As interest rates ease and confidence improves, demand in the upper and mid-end markets will likely persist—but achieving inclusivity across income levels remains the next big challenge for the sector.