Approved building permits fell 5.9% year-on-year in December, the Philippine Statistics Authority (PSA) said in a report, citing slower economic growth and cautious sentiment among developers.
According to preliminary data, the PSA said that the number of construction projects included in permits fell to 11,411 in December from 12,127 last year.
This was a larger decline than the 2.6% decline in December 2024, but better than the 10.1% decline seen in November 2025.
In December, construction projects totaled 2.67 million square meters of space, down 8.2% year-on-year.
Approved construction projects cost P33.62 billion, 13.4% less than last year.
Marco Antonio C. Agonia, an economist at the University of Asia and the Pacific, said the decline in construction permits could be attributed to the sluggish growth outlook and still tight financial conditions.
Economic growth slowed to 3% in the fourth quarter of 2025, bringing the full-year reading to a five-year decline of 4.4%, PSA reported.
“Property developers are likely to postpone their projects facing low demand prospects. The fallout from delays in government issuance of infrastructure projects (due to cost freezes) may also continue to spill over into the approval of building permits,” Mr Agonia said by email.
Jonathan L. Ravelas, senior counsel at Reyes Tacandong & Co., said of Viber that the continued decline in building permits indicates a slowdown rather than a fall.
“High interest rates, high construction costs and developer caution are delaying new projects, especially in residential and small buildings,” he said.
The key policy rate fell to 4.25% from 4.5%, the lowest in three years, from 3.75% in August 2022.
The Monetary Board has reduced borrowing costs by a total of 225 basis points since starting its easing cycle in August 2024.
The PSA also reported that residential projects, which accounted for 63.1% of all permits, fell 7% to 7,203 in December.
These programs were estimated at P12.13 billion, down from P17.40 billion last year.
Single-family homes, which account for 87.6% of the residential category, fell 8% year-over-year to 6,312.
Applications for residential properties declined by 12.7%, while applications for duplex or four-bedroom homes increased by 90.6%.
Meanwhile, non-residential projects, which accounted for 23.4% of the total, contracted 3.6% year-on-year.
Permits for non-residential projects totaled P17.81 billion, down 1.2% from last year.
Approved commercial building applications accounted for 67.6% of all 1,802 non-residential projects.
Industrial permits fell by 12.4% to 205, while institutional projects fell by 1.8% to 497 approved.
Approved permits for additions, or construction that increases the height or area of an existing building, fell by 2.3% to 387 during the period.
Replacement and repair permits recorded a year-on-year decrease of 8% to 858, although their value increased by 23% year-on-year to P2.60 billion.
Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) had the most approved construction projects during that period, comprising about 25% of the total 2,838 permits.
This was followed by Central Luzon (no 10.6% shares and 1,215 permits), and Ilocos Region (8.8% and 1,005 permits).
“What we are seeing is a wait and see mode,” said Mr. Ravelas.
“The good news is that once borrowing costs ease and demand stabilizes, permits should recover – construction tends to follow over time,” he added.
Mr. Agonia said the construction industry may see modest growth in 2026.
“The annual decline means that 2026 will be compared to a lower base, leading to higher growth figures. However, the desire to build may actually normalize in the second half of the year, when many analysts expect government spending and investor sentiment to recover,” he said.
Mr. Agonia added that he expects more in the coming months depending on how business sentiment develops.
“Other positive factors that should be looked at are the recovery of capex by the government and private companies (capital expenditure), and the impact of the reduction in collection rates that may be felt in the last half of this year,” he said. – Pierce Oel A. Montalvo
