In the first months of the year, home sales in Colombia have experienced a significant decline, according to data revealed by industry experts. During this 2023, it is estimated that around 125,600 units will be sold, which represents a 55% drop compared to the same period of the previous year.
The report presented by the National Administrative Department of Statistics (DANE) indicates that, until March of this year, the construction sector suffered a contraction of 3.1% in its economic growth. However, it is important to highlight that the residential and non-residential building construction segment achieved a modest growth of 2.6%, although it is well below the growth of 11.9% observed in the same period of 2022.
On the other hand, the Colombian Chamber of Construction (Camacol) reported that during the first quarter, 32,838 units were sold, which represents a negative variation of 55.3%. In addition, the contraction in new home sales continued in April, with a 62% drop compared to the same month of the previous year.
In this context, Edwin Chiriví, manager of Camacol Bogotá and Cundinamarca, pointed out that it currently takes three times as long to sell a home. In April 2022, builders took an average of 5.3 months to sell a Social Interest Housing (VIS), while currently they must wait up to 16.8 months. In the case of the non-VIS housing segment, the sales time has increased from 11.6 months to 21.6 months during the same period.
Bancolombia’s economic analysts attribute this situation to both housing demand and supply factors. Rising financing rates, higher construction costs, and more expensive homes have made homeownership more expensive across the country.
Bancolombia experts also point out that the rotation of housing sales has increased, which indicates a longer time required to sell all the available supply. For the VIS segment, turnover went from 10.4 months in February to 12.6 months in March, while for the non-VIS segment it increased from 15.5 months to 16.4 months in the same period.
In addition, there has been a decrease in the availability of units due to the end of the subsidy program for non-VIS housing and the delays in the start of the program for affordable housing.
Willingness to buy a home, measured by Fedesarrollo, stands at a worrying -44.8%. Although this measure has decreased by 3.5 points since February, it still remains at levels similar to those at the time of the pandemic. Bogotá, Cali and Barranquilla have shown a recovery in this indicator, while Medellín and Bucaramanga have experienced a decrease.
Camacol’s president has highlighted the importance of reactivating housing construction activity to avoid employment risks. According to his statements, the initiation of new social interest housing construction works decreased by 39% in April compared to the same month last year. Given this situation, it is necessary to implement sectoral and housing policies that promote construction activity.