Metro Manila's residential property market continues its recovery, though progress remains uneven across segments. Elevated vacancy rates, a substantial volume of unsold inventory, and regulatory bottlenecks are all tempering the pace of improvement. Demand has nonetheless stayed resilient, particularly in the economic and affordable housing categories, highlighting the persistent need for accessible residential products in a market contending with affordability challenges and a widely documented housing backlog estimated at several million units.

According to Colliers Philippines, the residential sector's recovery is no longer simply about generating demand. The focus has shifted toward ensuring that supply reaches the market efficiently and aligns with the needs and purchasing power of Filipino homebuyers.

Affordable Housing Drives the Market

The strongest demand during the first half of 2026 came from residential projects priced between P1.8 million and P3.6 million. Economic and affordable housing projects accounted for a growing share of condominium take-up, reflecting buyers' increasing sensitivity to pricing and financing costs. This price sensitivity reflects a broader environment in which the Bangko Sentral ng Pilipinas maintained elevated policy rates, keeping mortgage borrowing costs high for much of the period.

Government support has been instrumental in this trend. The Pambansang Pabahay para sa Pilipino (4PH) initiative, combined with Pag-IBIG Fund's lower mortgage rates and higher loan limits, has broadened access to homeownership and stimulated demand among first-time buyers and end-users. These measures have helped counter the effects of elevated interest rates and broader economic uncertainty.

Developers Adopt a Cautious Stance

While demand persists, developers remain guarded. Metro Manila continues to grapple with a significant inventory overhang, including a large stock of ready-for-occupancy units situated on the peripheries of major business hubs. In response, many developers have shifted priorities from launching new projects to clearing existing inventory and protecting margins. The lease-to-own model has emerged as an attractive mechanism for moving unsold stock.

Project launches and completions have remained subdued, with only one residential condominium project completed during the second quarter. Construction cost pressures, geopolitical uncertainties, and concerns over unsold inventory have all contributed to a more measured development environment.

Provincial Markets Gain Momentum

As Metro Manila developers grow more selective, residential growth opportunities outside the capital continue to expand. Key markets including Cavite, Laguna, Batangas, Pampanga, Bulacan, Cebu, Iloilo, Davao, and Negros Occidental are posting strong take-up rates for both horizontal and vertical developments. Improved connectivity through ongoing government infrastructure spending has made several of these corridors more viable for both commuters and developers.

Leisure-oriented and resort-style projects are also drawing considerable buyer interest. Demand for developments in tourist destinations such as Batangas, Boracay, Palawan, Bohol, Cebu, and Davao signals that investors and end-users are increasingly looking beyond Metro Manila for lifestyle and investment opportunities.

Toward a More Inclusive Housing Market

The Philippine residential market is not constrained by a lack of demand. What it requires is a more coordinated effort to deliver housing efficiently, improve affordability, and expand opportunities beyond Metro Manila.

Colliers Philippines outlines a clear path forward: accelerate approvals, strengthen public-private collaboration, support affordable housing, and continue developing emerging regional markets. By doing so, the sector can move beyond inventory challenges and vacancy pressures toward a more balanced, inclusive, and sustainable housing market capable of supporting long-term economic growth.

In key areas outside Metro Manila, demand is waiting. The challenge now lies in ensuring that supply can move quickly enough to meet it, with strong public-private partnerships playing a crucial role.

Joey Roi Bondoc is the Director and Head of Research at Colliers Philippines.