Colombia | Real Estate Outlook. February 2024

The housing sector is in a deceleration phase: low sales, high cancellations, and increased finished inventories. Certainty about VIS subsidies, reduced interest rates, and improved household financial balances will aid recovery, expected to be slow, gradual, and solidified by 2025.

Key points

• Key points:
• This presentation coincides with the report "Behind the Scaffold: The Structure of the Construction Sector in Colombia" (February 2024), providing an overview of construction supply and demand and a special focus on urban design. Download the report at www.bbvaresearch.com.
• Housing sales are anticipated to recover, reaching a range between 150,000 and 180,000 units in 2025. Inventories and cancellations will remain high in the first half of 2024, gradually subsiding afterward. The pre-sale model mitigates the risk of excessive inventory accumulation, widespread bankruptcies, and systemic crises in households and the financial sector.
• The timing and effectiveness of housing subsidies will be crucial in reducing purchase cancellations, especially in the VIS market, and promoting construction outside major cities.
• In the non-residential used market, vacancy continues to gradually decrease. Post-pandemic, the construction of new buildings for these purposes declined, reducing the overall non-residential supply and contributing to sectoral equilibrium in the medium term.
• Real estate prices for both new and used homes rebounded in 2023. Housing purchase credit accounts for 12.6% of the GDP, reaching the highest level this century. There are 1.5 million credits totaling $124 trillion in the financial system. Most credits are for new homes, although the average value of credits for used homes is higher.

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