In an environment of strong economic slowdown, visible in less consumption and under an environment of high uncertainty, both locally and internationally, only in the first two months of the year the building construction market shows an increasingly gloomy, all right with the most recent figures released by the Colombian Chamber of Construction (Camacol).
(Sales of Social Interest Housing plummeted 64% in February).
This Thursday, the union reported a significant drop and deterioration of the main indicators with which the pulse of this sector is measured, key not only for economic growth but for job creation.
Indeed, Guillermo Herrera, president of the association, revealed that, in February, the sale of brand new units had a 62% drop, with the number of houses and apartments sold standing at 9,920, while the situation was much worse for Social Interest Housing (VIS), which in recent years has become the backbone of the sector.
Thus, during the second month of the year, transactions were made in the country for the purchase of 6,655 units, 64% less than in the same period last year. The situation, according to the manager, is increasingly alarming, since today 72% of all homes sold in Colombia are VIS, a figure that when compared to that observed 10 years ago is representative, because its share was 40% of the market. In other words, in a decade they went from selling around 100,000 VIS units to around 200,000.
(This is the formula you should consider when buying a home.)
In addition, another of the alert indicators presented by the construction union has to do with the skyrocketing turnaround time of the finished housing inventory, which in the case of social housing reached 10.4 in February 2023. months, more than double what it shows less than a year ago, in April of last year, when the indicator stood at five months.
«These sales levels, 6,600 units, are very similar to what we saw on average in the three most complicated months of the pandemic in 2020, and are an alarm signal,» assures the president of Camacol.
The builders’ union put out its alerts due to the effects that this situation can generate in the economy, which originates from the freezing of subsidies for the purchase of housing, which In the case of the VIS, many people are waiting for this state aid to be able to protocolize the disbursement.
Even sources from the financial sector, familiar with this market, pointed out that the situation is worrisome because before for banks the fact that a client had a subsidy gave them a guarantee and generated points in favor in the credit analysis of future debtors. , a situation that has changed due to the situation.
According to Camacol, this is due to the fact that, for the first time, in 2022, the disbursements of subsidies for households were frozen, and to date there are 40,000 households waiting for the resources for which they applied and which are key to being able to formalize the deed of the new buildings.
(Rise in the price of new housing, the highest in 8 years).
Camacol data indicates that, of these 40,000 homes, 23,000 correspond to homes completed by September 2022, to which must be added another 17,000 units completed between October of last year and January of this year.. And to this number we will have to add 6,000 more homes that will be added each month to the demand for the Mi Casa Ya program during the year 2023.
“Having that amount of undelivered homes represents great expenses for Colombian households, since there are 40,000 families that are waiting for the housing subsidy and meanwhile, they must assume approximately $15,720 million per month in rent”Herrera added.
And he remarked that, if the trend of the first two months of the year consolidates, the national economy could present great effects, this because construction annually contributes about 4.5 points of national GDP and generates 4 million jobs, which represents nearly 7% of formal employment in the country.
Low contribution rate
According to Luis Aurelio Díaz, president of the Oikos Business Group, the current situation is a normal cycle like those that have been experienced several times in history, but this time it is «tied tight» to interest rates, which other banks began to lower for long-term loans.
“The decrease in a single month does not generate so many negative effects, but it is necessary that solutions be found, such as the reduction that is being seen in interest rates. In addition, the Government reported that they are going to remove the subsidies for Mi Casa Ya and that improves the outlook,” The businessman stands out.