Colombia’s housing market is in its toughest period in 15 years, with sales down 17.7% from January to March 2024, totaling 32,017 units.
High inflation and rising interest rates have driven this steep decline. Camacol’s president, Guillermo Herrera, reports this as the weakest first quarter in over a decade.
The downturn has significantly reduced new housing launches by 34% and project initiations by 26.7%.
Between 2013 and 2019, monthly sales averaged 14,701 homes; by March 2024, this figure had fallen to 10,474.
This slump echoes the market conditions of 2011, threatening both economic stability and employment.
Reverting to 2011 sales levels could mean reducing the workforce from the current 1.5 million to 1.1 million, Herrera warns.
Carlos Osorio from the Democratic Center and Senator David Luna have expressed concerns over the declining sector and its impact on jobs.
More than 50,000 jobs have already been lost as of early this year.
Luna criticized the government’s proposed budget cuts, which would decrease housing policy funding from COP$4.3 trillion ($1.1 billion) to COP$2.1 trillion by 2025, a 51.5% cut that could further affect housing subsidies.
Despite these challenges, Herrera remains optimistic that conditions in Colombia like construction costs and interest rates will gradually improve through 2024.
However, the sector still faces uncertainty from inconsistent housing policy implementation and a lack of a clear revitalization plan.
Colombia’s Housing Crisis Deepens with 15-Year Low
Signs of recovery are emerging, with inflation and construction costs decreasing. The Central Bank has also been lowering the monetary policy rate since December 2023.
Over the past year, the financial sector has reduced mortgage rates by about 220 basis points, bringing them down from nearly 16% to below 14%.
Currently, the housing market holds over 166,000 units for sale, 67% of which are still in the planning stages and could start as market conditions for demand improve.