Drop in entire home sales 15 months; in May only 8,196 units were sold – Sectors – Economy

Sales of low-income housing (VIS) in Colombia continue to be in the doldrums, as fell 66 percent in May Compared to the same month of 2022, only 5,561 units were sold. Regarding No VIS, 2,635 units were sold.

The Urban Coordinate figures also indicate that in the first five months of 2023 64,000 homes were abandoned to sell compared to the same period last year.

(Also read: Learn about the advantages of investing the first half of the year in buying a home).

this i represent a reduction of 13 billion pesos in investment in new housing households (one percentage point of GDP). Of this amount, 7 trillion pesos corresponded to VIS.

With this new fall 15 months of this downward trend are completed and a quarterly average of sales of VIS and offer of medium and high ranges (No VIS) lower than the initiations.

The president of the Colombian Chamber of Construction (Camacol), Guillermo Herrera, said that sales are the ‘fuel’ that moves the entire value chainbut it would be running out, a situation that has generated an alert for employment and other variables in the sector.

Lower home sales are also hitting employment in the construction sector hard. While between January and April from 2019 to 2022, an average of 46,657 jobs were generated, in the first four months of this year, only 2,448 new jobs were created.
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This means that more than 44,000 jobs have been lost in this industryDue to its linkage effects, it is also beginning to impact other sectors of the national economy, such as the production of cement and concrete.

(Also read: Housing sales in Bogotá until May are among the lowest in four years).

Proposals to reactivate sales

In order to offset the contraction that home sales have been registering, the president of Camacol presented three proposals to the National Government that bet on the reactivation of this sector.

The first is to catch up with the Mi Casa Ya program. With the budget addition, 2.24 trillion pesos would be achieved for the program, which would allow the disbursement of 75,000 subsidies this year. There would also be 52,000 hedges at the interest rate for 2023 and 8,000 for 2024.

However, the accounts indicate that at least 90,000 down payment subsidies and interest rate coverage are required to cover household demand. This means that there is a deficit of 15,000 subsidies to the initial quota and 33,000 coverages.

The second proposal bet on working on the countercyclical strategy announced by President Gustavo Petro, which must be presented to the sector, so that it can be promoted in an articulated way to stimulate the start of works.

The union leader assures that it is necessary to appropriate the budgetary resources for 2024 in order to support more than 100,000 VIS homes that already have more than 70 percent marketed and a year of pre-sale.

The third proposal is guarantee business sustainability with a transition regime so that households that have already bought their homes can continue with their real estate businesses and entrepreneurs can close the projects they have and launch others.

(Also read: Advantages of buying a new home off plans in Colombia).

This avoid the cancellation of works which, according to Coordenada Urbana, with cut to May, increased 18 percent with special incidence in 92 percent of the medium and small companies that develop VIS housing. Added to this is the impact on the industrial chain of buildings, and on retail trade and micro-businesses associated with the popular economy.

Regarding the effects on the sector due to the modification to the Mi Casa Ya program, Guillermo Herrera added that the actions also proposed seek to counteract the decrease in credit disbursements for new subsidized VIS that cyesterday 79 percent in the first quarter of the year.

“Even so, and in the midst of eventualities, housing has shown that it continues to be a good investment,” said the president of Camacol.

Despite the negative numbers in home sales, a survey by Estrenar Vivienda reveals that Colombians are still interested in buying their own home. Each month, more than 15,000 people register with the interest of acquiring housing and half buy.

Even, 80 percent of those who invest in VIS housing opt for the subsidy for financial close, which means that the purchase decision is sensitive to public policy.

Another point in favor has to do with the inflation -which has been falling for two months- and several banks adjusted their rates to benefit families. “Buying a home is a good option, with the advantage that appreciation is gained,” said the president of Camacol.

Are the subsidies for Mi Casa Ya and competition running out?The Minister of Housing says that they will continue in 2023, but the Government has not yet defined its financing.