Home sales in the country, especially those of social interest, are in free fall. Last May, only 5,561 units were sold, the lowest figure since April 2020, the hardest month of the pandemic.
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In an interview with EL TIEMPO, Guillermo Herrera, president of Camacol, assured that these negative figures are directly linked to Mi Casa Ya, and to reactivate the sector makes several proposals to the Government, since the collapse in sales is having a domino effect on the entire industrial chain and small businesses.
What is the outlook for the housing sector?
Guillermo Herrera Castaño, president of Camacol.
We completed 15 continuous months of falls in home sales, with a greater impact on low-income housing. In all the time variables the deterioration of sales is present, in the last 12 months those of social interest (VIS) have had a negative variation of 36 percent, in the current year they have fallen 58 percent and in May they decreased 66 percent. one hundred one hundred In terms of total sales of VIS and non-VIS, they went from selling 118,000 units to 53,000, that is to say that Some 64,000 units have stopped selling, representing an investment of 13 billion pesos by households and the private sectorwhich may be a loss of almost a percentage point of gross domestic product.
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What are the causes of the real collapse in the sale of VIS?
One is the conditions of the economy because Colombia, like most countries in the world, has been facing high levels of devaluation and inflation that have had effects on the increase in the cost of mortgage loans. Loan interest rates went from 10 to 18 percent and, despite the efforts that banks have made to reduce rates, this has been discouraging home buying. An additional factor has to do with the Mi Casa Ya program. Resources ran out in October of last year and reimbursements resumed in May of this year. This has had an impact on sales, which as of October 2022 begin to fall more strongly.
Another part of this problem has to do with the adjustments to Mi Casa Ya, which introduced procedures such as the Sisbén and changed the dynamics of real estate businesses because now the subsidy does not go from the beginning of the decision of the poorest households, but instead it is a possibility at the end of the process. Before, you could go out on the market to buy a VIS home with the guarantee that the Government would give the subsidy if the conditions they set were met; Today, the subsidy goes to the end as a possibility after the sale is made and the credit has been requested. This has been showing a lot of concern in the sector, it has generated distrust of the program and, in the long run, what it will generate is targeting problems because the households that receive the subsidy may be households that have already purchased and do not need the subsidy. .
Should the sisbén requirement be removed?
Yes, that request was made to the Ministry of Housing, even when the decree project was published, because the Sisbén is imperfect. The director of the National Planning Department, Jorge Iván González, said that Sisbén was an imperfect mechanism and that it had problems of exclusion that affected more than 3.5 million households. In March we told the Ministry that the Sisbén was good to define which households can or cannot enter the program, not as a criterion to decide the income that households must have to access the amounts of the subsidy. Obviously, this has generated traumatisms because the estimates that we have in Camacol indicate that, of all the households that have been buying housing for more than 12 months, more than 40 percent do not have the Sisbén. Now they have to do this procedure that was not contemplated and this has arisen from the commercial dynamics of housing in the country.
So far this year, the drop in new home sales has reached 54.5 percent, according to Camacol figures, which include VIS units.
Courtesy Mora and Engineers
How serious will be the effect of this situation on the economy?
We are already beginning to see impacts on employment. In the first three months of the year, nearly 44,000 jobs were abandoned in the sector. In recent years, on average, between January and March, the sector generated 36,500 jobs and this year only 2,400 were created. The production of employment was absolutely marginal.
In addition, the popular economy is emerging – such an important axis for the policies of this government – because many micro-businesses associated with the construction sector have seen a reduction in their net sales that exceeds 17 percent and have lost 20 percent of their profits. the occupancy levels they used to.
What should the Government do to reactivate the sector?
The Mi Casa Ya program must be updated, and progress has already been made on this with the approval of the budget reduction. Today we have more than 50,000 completed homes that are on hold on the market because they could not be delivered due to the end of the subsidy resources. In addition, we are going to continue to build and finish some 90,000 units that will accumulate until December of this year.
The budget addition will make it possible to have 75,000 places for subsidies, but this is only part of the story because with these resources one of the two benefits that Mi Casa Ya has, which is the down payment subsidy, will barely be covered, what remains to be told Colombians is that households need an interest rate subsidy. These two benefits have to go hand in hand because, otherwise, the homes cannot be delivered and this year there are only 52,000 places approved for interest rate subsidies. There is already a budgetary programming problem on the part of the Government.
on the one hand, they have 75,000 places, and on the other, there are 52,000, this means that they are not articulating the resources so that the same number of families have access to the full subsidy. This could cause what happened last year to happen again at the end of the year, which is that 23,000 families are left waiting for the disbursement of money to receive their homes.
Another proposal is to work on a reactivation plan because the projects that have a break-even point are already ready, we have 108,000 homes in 347 projects throughout the country. This means that households have already paid the initial fee and that if the subsidies arrive, the works could begin that allow the generation of more than 200,000 jobs and an investment of more than 16 trillion pesos, which would contribute more than one point to the growth of the economy. percentage.
Camacol said that 300,000 million pesos were needed for Mi Casa Ya, but they were not approved in the budget improvement…
The budget addition will make it possible to have 75,000 places for subsidies, but with these resources only one of the two benefits that Mi Casa Ya has will be covered.
This may affect the extent to which homes accumulate that are not going to have subsidies assigned this year. Possibly some 15,000 homes could be left without a down payment subsidy and without the benefit of the Frech rate. There is a big challenge for the National Government, which, however, will have to reschedule resources so that at least the 75,000 who already have a quota have interest rate coverage.
What can construction companies do to help in this reactivation?
Our interest is that employment does not continue to deteriorate, they have already stopped hiring more than 44,000 people, who are mostly construction workers, they are people who earn more than a minimum wage. It is necessary to have a countercyclical strategy to stop the deterioration of employment that has already become evident due to the difficulties that the sector has had and the subsidy program. (You may be interested in: Housing in Cali: this is how real estate purchases are moving in the city)
Will other builders offer discounts as announced by Contex?
I am not aware of that case, it is not a construction company affiliated with Camacol. They told me that they were looking to generate discounts of 24 million pesos in the VIS, if that person can do that, I think that should be the country’s Minister of Housing.
That is a no?
According to data from the Superintendency of Companies, close to 70 percent of construction companies have profitability levels of less than 5 percent in low-income housing projects.
In addition, 92 percent of the companies that build VIS are micro, small and medium-sized companies, which today are absolutely indebted, passing oil and facing many problems due to the lack of availability of resources and budgetary programming so that the ministry (of Housing) to catch up with the disbursements that it had to expedite so that households could access their homes and the investments made by these construction companies could be released.
in fact, today we have 52,000 dammed homes, which represent an investment of more than 6 trillion pesos and which cost the construction sector around 80,000 million pesos per month for the payment of interest while the Government resumed the disbursement of subsidies.
We have a big problem, and beyond seeking discounts on housing prices, we must catch up with the housing accumulation problem that is also improving business performance, especially in small regions such as Córdoba, Sucre and Boyacá.
What changes should the labor reform have before filing again?
This reform hits the construction sector in a special way because it is unaware that it is a seasonal sector, that it has specific processes and bases its workforce on subcontracting processes, which are not included in the last labor reform.
Beyond the impacts on costs, it will also affect the supply of low-income housing, which we estimate will be very strong if it is adopted.
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