Owning your own home is the dream of thousands of families in Colombia, but this year several factors have combined to make it that much more difficult to achieve. Like other industries, the housing sector is strongly affected by a panorama of inflation, expensive dollars, high interest rates and economic slowdown.
With inflation reaching a maximum of 13.34 percent per year and the dollar still above 4,500 pesos, mortgage interest rates rose to 16.6 percent in February from 11.6 percent a year ago.
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The effects of these factors are reflected in the withdrawal of purchases, the payment of mortgage loans and home rentals, and of course the sale of fewer homes.
As in the first half of 2022, the months when sales records were announced are now history. More than 25,800 units were sold in February of last year, while only 18,800 units were sold by July. and the year closed in 13,200 homes.
But the decline became more pronounced in February 2023, when only 9,920 homes were sold. 61.6 percent less than a year ago.
VIS alone added 6,655 units, down 64 percent. This figure is similar to the recorded The three most complicated months of the covid-19 pandemic: March, April and May 2020.
In addition, Guillermo Herrera, President of the Colombian Chamber of Construction (Camacol), underlined that the time to sell social housing in the country has doubled, It was five months in April 2022, and last February it has already increased by more than 10 months, reaching the highest level since 2012.
Similarly, the inventory of unsold finished homes is increasing. In the second month of this year, this indicator was 1.7 percent, a figure that has not been seen for 10 years.
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Another issue affecting the housing sector was the increase in construction costs. It rose 14.18 percent year-on-year in February, according to data from the National Office for Administrative Statistics (Dane). The highest increases were recorded in Montería (14.80 percent), Manizales (14.67 percent) and the Aburrá Valley (14.66 percent).
“These are movements that clearly concern us and that challenge the efficiency of the industry, while also creating problems for the financial closure of housing projects considered for the future,” said Guillermo Herrera.
Luis Aurelio Díaz, President of Oikos Business Group, thinks that some input prices may normalize by next June. this indicates that it will be a very promising second period for the development of construction.
But he also believes that the Executive must provide the necessary conditions for Construction companies to continue promoting the development of housing solutions demanded by families.
In addition, inflation will be brought under control by the middle of the year and that The Bank of the Republic decided to lower interest rates in order to bring more dynamism to the economy.
“The 2023 economic environment will not be easy because it will continue to be affected by inflation and interest rates; however, precisely because of this need for home ownership in some sectors, especially low and middle income sectors, a scenario that invites optimism emerges.”
According to Camacol forecasts, this difficult scenario will result in the gross domestic product of buildings growing by only 9.8 percent in 2023, a figure lower than 11.8 percent last year.
For the head of Camacol, the suspension of the Mi Casa Ya program since October last year has also hit home sales in Colombia since this fall has accelerated since this month.
However, the numbers are showing a recovery as the Ministry of Housing will finally reactivate this program, which was previously closed. More than 40,000 families could not sign the title deeds of their houses due to lack of payment. of this subsidy
With the publication of the Decree Law No. 490 dated 2023, the arrangements made by the Government in Mi Casa Ya became final and from tomorrow, families will be able to check their status and the steps to follow on the ministry’s website to start or continue their transactions.
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In 2023, the transition phase to the program will be carried out to allocate subsidies to families whose loans have been approved, have worked as real estate agents and fulfilled the requirements of the program. The first cut for appointments will be made on April 15 and will air on Monday, April 17.
Also, the ministry decided to regulate the classification requirement for Sisbén IV so that more households can apply. Therefore, there will be only one criterion at national level, so households classified between subgroups A1 and D20 can apply to become beneficiaries.
Households classified between subgroups A1 and C8 will receive a first installment subsidy of pesos 34.8 million.and 23.2 million pesos will be given to households between C9 and D20, taking into account that the minimum wage for this year is 1.16 million pesos.
Guillermo Herrera, president of Camacol, said that another way to promote access to housing is through large institutional investors. It can develop social interest housing projects (VIS), especially for low-income households that spend too much on rent today. and those who do not meet the requirements for making a mortgage loan agreement.
“This is a proposition where households don’t necessarily have to be owners. “There is a market for VIS leasing by natural persons buying as investments in Colombia, but we believe this can be further increased to have fiduciary mechanisms or real estate funds that can promote this on a large scale.”
Source: Exame
