In which cities in Colombia will it become more expensive to buy a home in 2023?

By Daniel Salazar Castellanos

The increase in the costs of construction materials, the strong inflation that has not been alien to the sector, and the delays in the continuity of state subsidies have impacted the construction sector in the country.

In the last twelve months to March, less than 200,000 new homes were sold in Colombia, 25.4% less than in the previous period.

This situation is also generating direct effects on the price of housing in the country, where 40.2% of households in 2022 lived in rented or subleased housing, 34.9% in fully paid housing, and 13.9% lived as usufructuaries, according to figures from the National Administrative Department of Statistics (DANE).

The increase in new housing prices “is occurring in a context of economic slowdown, which has generated a potential demand for housing that exceeds the existing supply,” the Colombian Chamber of Construction (Camacol) explained to Bloomberg Línea.

The aggregation points out that it is “important to note that the housing market in the country is very heterogeneous and prices can vary considerably according to geographic location, type of property and other factors specific to each market.”

Therefore, some may experience a greater increase in prices than others.”

According to the most recent new home price index (IPVN) data reported by Dane, during the fourth quarter of 2022, new home prices increased in several cities in Colombia.

Those with the highest annual increases were Ibagué (19.0%), Armenia (16.2%), and Popayán (15.5%); in contrast, the lowest variations were in Cartagena (1.4%) and Neiva (6%).

The vice president of the real estate platform Ciencuadras, Paola Suárez, explains in a conversation with Bloomberg Línea that particularly in Medellín “a considerable increase in the value of the square meter has been evidenced, going from $5.9 million (US$1252.54) by the end of 2022 to $6.4 million (US$1380.39) by March 2023″.

“The variation is due to the phenomenon of gentrification in the city. In new housing, sales have decreased by 60% compared to 2023 and used housing by 45%,” she reported based on figures from that platform.

In addition to gentrification, he cites factors such as the desisting of new housing, short-stay real estate, the migration from “traditional” rental to “vacation” rental model, inflation, and the change in subsidy allocation policies.

Although prices are expected to continue to increase, it is important to remember that economic and financial factors may affect the housing market and that the situation may vary in each local market.

In its opinion, with the formalization of the Development Plan and the implementation of the transition model of the Mi Casa Ya program, it is expected that by the end of 2023, the Social Interest Housing – VIS market will stabilize.

“Additionally, the banks that grant housing loans are implementing different strategies to reduce rates to encourage the placement of loans and the sale of real estate.”

“And in turn, the construction companies are extending the down payment terms to allow Colombians to buy housing and reduce the number of withdrawals,” he added.

Camacol says that it is difficult to accurately predict prices due to the uncertainty generated by the current economic situation.

However, “it is expected that the upward trend will continue for the rest of the year, although perhaps not at the same pace as in recent quarters. This is due to a context of inflation such as the current one, in which it is common for the prices of different goods to increase, including housing”.

The housing purchase intention indicator of the Fedesarrollo think tank continues in negative territory (-44.8% YoY, although with a slight improvement compared to the previous month.

According to Bancolombia, housing sales reached 9,129 units in March, a drop of 61.4% YoY.

According to a report from that entity, these sales volumes are at the lowest recorded in the pandemic.

“The figure is explained by the drop in both the VIS segment (-65.6% YoY) and the non-VIS (-50.9% YoY). ”

“Thus, the deterioration of housing sales consolidates a trend that has impacted the overall performance of the construction activity,” it added.

Meanwhile, as of March, the entity points out that “the housing portfolio of credit establishments maintains its dynamism despite slowing down compared to the last records, growing 11.6% YoY”.

It is estimated that 52.7% of households in Bogota were living in lease or sublease in 2022.

The percentage of households in the housing deficit for the national total in 2022 was 30.4%.

But which cities have housing (apartment and house) become more expensive, and what is the average sale price in 2023 (new and used)?

• Barranquilla: 56.5% – Median sale price: $450,000,000 (US$97058.34)
• Bogota: 45.7% – Median sales price: $550,000,000 (US$118626.86)
• Medellin: 43.8% –  Median sales price: $520,000,000 (US$112156.30)
• Calli: 34.9% – Median selling price: $450,000,000 (US$97058.34)
• Cartagena: 31.9% – Median sales price: $600,000,000 (US$129411.12)
• Bucaramanga: 27.5% – Median sales price: $320,000,000 (US$69019.26)

With information from Bloomberg