The Colombian economy will experience a very strong slowdown this year. Cumhuriyet Bank predicts that we will fall below 0.5 percent in 2023 from 7.5 percent growth rates in 2022. The behavior of the main indicators is nothing but cause for concern, despite the Ministry’s forecasts. The most relevant name is a 13.28% inflation that shows no signs of declining, volatility and high devaluation rates, rapidly rising interest rates, falling investment, zero job creation. As investor confidence collapses due to insufficient brava reform statements from all economic and social sectors, country risk is increasing.
In the face of this gloomy picture, the housing sector not only contributes to the solution of one of the most felt social needs, but also contributes to the increase in domestic demand and employment. However, this sector is starting to be touched by the long and harmful hand of the Government.
It is worth remembering that the sector creates 1.65 million direct jobs, ie 7.7% of national employment, and when indirect jobs are included, it reaches 10% and represents 4.5% of GDP. In 2022, it became a major milestone in the economy, registering sales of 45 billion pesos, half of which was in the social-interest housing market and most of it thanks to the Mi Casa Ya program. 82% of construction inputs come from the local manufacturing industry and 11% from finance, real estate, telecommunication services etc. is welded.
Because of all this, the paralysis that began to appear in the near future is alarming. In January of this year alone, sales fell 50% compared to January of last year, and for this it is already estimated that there will be a 40% decrease in new projects. This is worrisome because more than 1.1 million jobs could be lost in the chain and the industry’s engine of input demand could be worth 16.5 billion.
If the subsidies and budget additions provided in the development plan are not increased, the 82,000 projected welfare homes will increase to 50,000, but we will reach the bitter truth that it will only be 27,000 when we subtract the 23,000 recorded last year. additional spaces. Only 1 out of every three households with expectations were able to buy their house. 55,000 homes will not be closed financially and will have to forgo their purchases. It is therefore urgent to allocate at least 1.7 trillion additional pesos to maintain subsidies, speed of construction and delivery.
In addition, using Sisbén as a targeting tool does not seem appropriate as it hinders the subsidy allocation process, affects the pre-sales model and can create insurmountable bottlenecks. When the minimum wage indicator reflects the costs of the sector much better, the idea of indexing the housing prices in the National Development Plan to UVT should also be reviewed.
There are already alarms that the government should not ignore. 458 construction companies are in the process of bankruptcy. Willingness to buy homes as measured by Fedesarrollo fell 51%, commercial pullbacks as a percentage of sales were 22% (the highest in a decade), mortgage loan payments fell 28% last year, interest rates fell from 11% to 20% of households’ indebtedness capacity. while the value of construction inputs grew by over 40%. All bad news for the industry.
Mi Casa Ya is probably the most successful program in the history of housing policy in the country. More than 250,000 homes benefited from a structured solution where the Government, builders, financiers and families worked seamlessly. However, they decided to end the interest subsidy because they also ended it. They haven’t paid a peso since September, making deeding 23,000 homes impossible. In order not to destroy a sector that has proven to be an important locomotive of the country’s economy and employment, I invite us once again to value those who work.
GERMAN VARGAS LLERAS
(Read all of Germán Vargas Lleras’ columns in EL TIEMPO here)
Source: Exame
I am Bret Jackson, a professional journalist and author for Gadget Onus, where I specialize in writing about the gaming industry. With over 6 years of experience in my field, I have built up an extensive portfolio that ranges from reviews to interviews with top figures within the industry. My work has been featured on various news sites, providing readers with insightful analysis regarding the current state of gaming culture.
