Loans of the Philippine banking system are broad-based, but real estate activities have consistently been the top recipient of bank loans. Banks’ real estate exposures continued to grow amid the pandemic. Real estate exposures of banks are largely composed of real estate loans at 85.4 percent of total real estate exposures.
Construction costs have increased 37% since 2003, adding an estimated 0.5 percentage points per annum since 2003 to annual CPI inflation. 15 In the current cycle it has been the indirect effects of increasing house prices which have also been an important driver of inflation.