Philippines weighs up property cooling measures

The Philippine central bank is reviewing property loans data to determine whether cooling measures are needed to avert a bubble, Deputy Governor Nestor Espenilla said.

"Our source of concern is the rapid growth of credit," Espenilla said. "The central bank is very mindful of seeing the foundation of an asset bubble that can burst and create dislocations in the economy."

Bangko Sentral ng Pilipinas, which yesterday cut the rate on its special deposit accounts for a third time this year, is monitoring the property market after bank loans and investments surged to a record, based on the most recent central bank data.

Rising prices have spurred developers including Ayala Land to build more homes.

Property loans and investments rose 18.9 per cent to a record 561.6 billion pesos (HK$105.4billion) at the end of the first half of last year, according to the latest central bank data.

Lending expanded by 4.4 per cent in the three months ended June from the previous quarter, it said. "The central bank is just being prudent and it's not making these moves because it already sees a bubble," said Rico Gomez, who helps manage US$2.8 billion at Rizal Commercial Banking in Manila. "When things are buoyant, it's always prudent to remain vigilant."

The Monetary Board may be presented with the latest data as early as this week and will assess if any action is needed.