By Rosemarie Francisco Reuters
MANILA: Merly Paz, a Filipina domestic worker in Hong Kong, has stopped sending money for the construction of her home in southern Iriga City because the value of her salary in pesos, which are pegged to the U.S. dollar, has fallen sharply.
“My salary is limited, so I placed the house on hold,” said Paz, 31, who has been working in Hong Kong for nearly eight years. “But the longer I’m putting it on hold, the more that prices of construction materials are rising.”
Overseas Filipino workers like Paz, who send money home to finance purchases and construction of family homes, have been causing a real estate boom in the Philippines.
But many overseas Filipino workers have cut back on property purchases recently as the peso value of their salaries has dropped 19 percent in the past year because of the weak U.S. dollar. A majority of the eight million overseas Filipino workers live in the United States.
This drop in purchasing should have taken a big bite out of the Philippine property sector, where real estate prices rose 18 percent in 2007 and 38 percent in 2006, largely because of demand from overseas Filipino workers.
And share prices of property companies have fallen because of a slowdown in overseas sales and worries of mortgage defaults.
But domestic sales are staying strong because of a large housing backlog, low interest rates, friendly payment terms, higher incomes of workers in the growing outsourcing industry and a rising expatriate population.
The slowdown in housing construction after the Asian financial crisis of 1997-98 led to a housing backlog of 3.8 million units in the Philippines, said Alex Pomento of Macquarie Securities.
About 70 percent of the population of 90 million do not own homes, he said.
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