The Metro Manila residential market opened 2026 on a stronger note, picking up from the low base of 4Q 2025. Condominium take-up reached 7,732 units in the first quarter, a 19% increase compared to the same period last year. Developers also launched 1,745 new units, up 30% year-on-year.

These are encouraging figures, but they require context. The uptick reflects a normalization of first-quarter demand patterns after a notably weak close to 2025, rather than a broad-based shift in market momentum.

A Rebound, Not a Recovery

The improvement in demand was primarily driven by end-users entering the market to purchase homes for personal use. Developer promotions, including extended payment terms and discounts, played a significant role in drawing buyers in.

Investor activity, however, remained subdued. Rental yields currently stand at 3.8% for primary units and 4.6% for secondary units. These levels remain insufficient to offset the high capital values of primary units, limiting renewed investor interest.

Market Activity by Segment and Location

Buying activity was concentrated in mid-market segments, where developer incentives have been most aggressive. Higher-end segments saw more restrained movement, with buyers in this bracket adopting a wait-and-see approach amid global uncertainty.

On the rental side, rates across Metro Manila's major districts continued to soften. Bay Area and Pasay recorded the steepest year-on-year decline at 17%, followed by Makati at 8%. BGC posted a more modest 2% dip, while Ortigas/Mandaluyong was the only district to register a slight uptick of under 1%.

"While 1Q 2026 demand showed early signs of recovery, the sustainability of this uptick hinges on global stability, financing conditions, and buyer confidence. Affordability constraints and elevated unsold inventory remain structural headwinds. A more decisive recovery is unlikely until external risks moderate and rental yields begin to normalize relative to capital values." — Roy Golez, Director of Research, Consultancy, and Valuation

Inventory Remains Elevated

One of the most pressing concerns for the market is the volume of unsold supply. Metro Manila currently has approximately 81,000 unsold condominium units spread across 621 actively selling buildings, equivalent to roughly 31 months of inventory at current absorption rates.

Tempered project launches and incremental gains in absorption provided some relief during the quarter. However, 31 months of supply remains well above healthy levels and leaves the market vulnerable if demand weakens again.

Ready-for-occupancy (RFO) units now account for 40% of unsold inventory, or about 32,400 units. Quezon City holds the largest concentration at 9,500 RFO units, followed by the Ortigas-Mandaluyong-Pasig corridor at approximately 7,200 units.

Stronger Performance Outside Metro Manila

Residential activity in the provinces has shown greater resilience, particularly in corridors supported by major infrastructure developments.

In Cavite and Laguna, south of Metro Manila, average prices per square meter in select projects in Laguna grew 11% quarter-on-quarter. Extended interest-free payment terms offered by developers in these areas have attracted buyers looking for more affordable options outside the capital.

To the north, Bulacan and Pampanga are emerging as key growth areas. The New Manila International Airport (NMIA) and upcoming transport infrastructure are drawing developer and buyer interest, with prices in select developments in both provinces posting double-digit quarterly growth of 12% and 11%, respectively.

Key Risks on the Horizon

Despite solid economic indicators, the growth trajectory remains vulnerable to external shocks. Prolonged geopolitical conflict in the Middle East poses the most significant risk, with the potential to place upward pressure on inflation and interest rates while constraining OFW remittance flows. These factors directly affect housing demand and the residential sector's ability to sustain its recent improvements.

Implications for Market Participants

For end-users: Current market conditions present opportunities worth considering. Developer incentives are substantial, buyers hold greater negotiating leverage, and the secondary market offers meaningful discounts relative to primary prices. That said, careful evaluation of individual buildings and locations remains essential.

For investors: A cautious approach is advisable. Compressed rental yields and elevated supply levels will likely limit near-term returns. Careful location selection is important, as market conditions vary significantly across districts.

For developers: Prioritizing liquidity preservation and inventory clearance over new launches is the prudent course of action. The sustainability of recent demand improvements remains uncertain, and aggressive expansion ahead of clearer market signals could increase exposure to downside risks.

Looking Ahead

The Metro Manila residential market has shown early signs of stabilization in 1Q 2026, and that is a positive development. However, affordability constraints, elevated unsold inventory, compressed rental yields, and an unpredictable global environment limit the potential for growth, making a more decisive recovery unlikely until external risks ease and rental yields normalize relative to capital values.

Market participants are best served by focusing on fundamentals, maintaining discipline, and staying closely attuned to how external conditions evolve over the coming quarters.

Want the full picture? This blog is a summary of our 1Q 2026 Philippine Property Market Report. Download the complete report at leechiu.com/market-insights.