Approved construction permits fall 2.2% in February on weak residential demand

By Heather Caitlin P. Mañago, Researcher

APPROVED building permits inched down 2.2% year on year in February, as high material costs and weaker residential demand weighed on construction activity.

Preliminary data from the Philippine Statistics Authority (PSA) showed building projects covered by the permits numbered 14,996 in February from 15,341 a year earlier.

This was a turnaround from the 3.2% expansion in February 2025 and the revised 1.6% growth in January 2026.

This was the weakest pace in two months or since the 2.6% drop in December 2025.

In February, construction projects covered 3.58 million square meters (sq.m) of floor area, down 3.5% year on year from 3.71 million sq.m.

These building projects that received approval were valued at P56.34 billion, 28.1% higher than a year earlier when it reached P43.99 billion.

“Downbeat economic recovery prospects and mounting building materials costs weighed on construction project appetite for February,” Marco Antonio C. Agonia, an economist at the University of Asia and the Pacific, said in an e-mail.

“The dip in approved building permits in February was mainly driven by weakness on the residential side,” Ser Percival K. Peña-Reyes, director of the Ateneo Center for Economic Research and Development, said in a Viber message.

Mr. Peña-Reyes attributed the contraction to a combination of high interest rates dampening housing demand, softer household spending, and cautious developers.

“It was largely the result of tighter financing conditions and softer housing demand outweighing modest gains in nonresidential construction.”

In February, permits for residential projects, which accounted for 61.8% of the total, fell 5.8% to 9,273.

These projects were valued at P16.42 billion, down from P18.67 billion a year earlier.

Single homes, which accounted for 81.7% of the residential category, fell 9.4% year on year to 7,578.

Applications for apartment buildings also plunged 24.4% to 1,020 from 1,350 in February last year.

Meanwhile, applications for duplex or quadruplex homes soared 381.6% to 549 during that month.

Nonresidential projects, on the other hand, increased 3.4% year on year to 3,542 from 3,426 in February 2025. This accounted for 23.6% of the total.

These permits were valued at P36.41 billion, rising 67% from a year earlier when it reached P21.81 billion.

Meanwhile, approved commercial construction applications inched up 0.3% to 2,426. These made up 68.5% of all nonresidential projects.

Industrial permits also rose 13.7% to 308, while institutional projects climbed 17.6% to 595 approvals.

Agricultural projects totaled 171 approvals, 24.8% higher than the 137 approvals a year earlier.

Meanwhile, other nonresidential works declined 54.8% year on year to 42 approvals in February.

Permits for additions, or construction that increases the height or area of an existing building, also fell 4.1% to 514 approvals.

Alteration and repair permits totaled 1,098 in February, 8% lower from a year earlier and were valued at P2.46 billion.

By region, Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) had the most approved construction projects during the period, accounting for 27.4% of the total with 4,113 permits.

This was followed by Central Luzon (13.9% share with 2,090 permits), and Ilocos Region (9.3% share with 1,390 permits).

“The larger project shares in Calabarzon, Central Luzon, and Ilocos Region show property developers’ preference for projects in suburban areas outside of the dense Metro Manila core,” said Mr. Agonia.

Mr. Peña-Reyes added that this trend likely reflects aggressive decentralization and infrastructure projects unlocking new growth corridors.

“We expect further declines in the coming months as the effects of the Middle East war weighs on property demand and pushes up construction costs,” Mr. Agonia said.

He also noted that elevated borrowing costs resulting from the conflict are also hampering developer appetite.

Mr. Peña-Reyes, meanwhile, said that while a continued sharp decline is unlikely, a “weak-to-flat trend” is the more realistic near-term outlook.

“One can expect mixed data in March and a gradual recovery over the rest of 2026, rather than a strong rebound,” he added.

The PSA said construction statistics are compiled from the copies of original application forms of approved building permits as well as from demolition and fencing permits collected monthly by the agency’s field personnel from the offices of local building officials nationwide.