The housing sector in Colombia continues to go through a bad time and it is not only due to the collapse in the sale of new units, which in May completed 15 months of sharp falls both in the low-income segment (VIS) and in the without VIS. Definitely, the slowdown of the economy, high levels of unemployment, the higher cost of living and the increase in the cost of financing are factors that have been contributing to deepen this crisis, which has not yet impacted the mortgage portfolio of financial institutions, according to a recent analysis by Banco de la República.

(Also read: Credit slows down again and non-performing consumer loans shoot up 57.5%)

According to the study ‘Analysis of the portfolio and the Real Estate market in Colombia’, prepared by María Fernanda Meneses, Daniela María Vargas and Eduardo Yanquen, researchers from the Department of Financial Stability of the country’s issuing bank, This series of economic factors has considerably raised housing inventories in the country, amid a decline in consumer confidence Colombians in the sector.

But they also warned that this contributed to slowdowns in prices and units sold, increasing rental prices, while the time to lease a property has decreased for various strata in the three main cities. «Despite these indicators, the financial sector continues to show good figures in credit risk measures for
housing and for builders

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The researchers pointed out in their analysis that housing demand indicators show significant slowdowns, which have significantly increased turnover rates. For the used housing market, decreases were observed in the times required to lease, and a heterogeneous behavior for the
times of sale, which could show a minor impact on its demand.

Sales times increase

New home sales times have increased significantly, while in the second-hand market they remain without much variation

The study highlights that consumer confidence at the aggregate level and home purchase continues at negative levels and with no signs of change, so much so that last May, this measure stood at -22.8 percent, a record low. Also the intention to buy a house is at very low levels, which is an indication that consumers have a more negative perspective of the housing market compared to the rest of the economy.

The foregoing has led to sales continuing in the doldrums throughout the national territory, continuing with the trend that had been taking place since last year, although more rapidly, as is the case of Medellín where the drop is 36, 5 percent its lowest point in history.

Thus, the expected time to sell new housing units has increased, which increases market risk. The report indicates that the expected time to sell a property is currently greater than one yearbut in the particular case of the surroundings of Bogotá, the expected time of sale is 32.8 months, being the highest peak recorded in this measurement.

In the case of used housing, the units available for sale or rent in Bogotá and Medellín fell, while the sale time of these units presented heterogeneous behaviors in these main cities.

According to analysts, «the time needed to sell used homes remained relatively stable in Bogotá, while for Medellín and Cali it presented increases, with the exception of stratum five in Cali, which must».

But if it is about renting a property, the behavior is different for those three main cities in each of the strata. In Bogotá, for example, the rental time of strata four and five was long, while that of stratum six remained stable.

For Medellín, he points out, in recent months there have been decreases in the expected time for all strata, with the strongest study being in stratum six. For Cali, the rental time increased for stratum six and stratum four, although the increase was more significant for the first, while stratum five remained stable.

The analysts also addressed the issue of housing prices and concluded that there has been a real decrease in sales on this front, while the value of rents has risen for the three main cities, which may indicate a
increase in demand for this type of contract given the increase in interest rates that could have discouraged home purchase

Impact on the mortgage portfolio

Despite the crisis that the housing and construction sector is going through, the entities’ mortgage portfolio has not been affected and the risk indices are still stable.


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Although the situation the construction sector is going through is quite complicated and has led some banking indicators in terms of financing to fall, the risks of the portfolio remain stable.

According to the study by Banco de la República, this situation has already led to a slowdown in disbursements and consequently the growth rate of the portfolio, which has produced a drop in credit deepening.
in the mortgage modality, with UVR credits being the most affected by the economic situation.

Until the end of last March, the entities had resources placed in the market of the order of 97.8 trillion pesos, representing 14.7 percent of the total portfolio of the system. Of this modality, 88.2 percent is portfolio granted in pesos, while the remaining 11.8 percent is in UVR.

For the bank’s analysts, when evaluating the credit risk indicators of this card in the midst of this situation, it was found that the entities that have UVR credits have not seen significant increases in their risk indicators. When examining the risk indicators for builders of residential buildings, it is observed that, although their indicators have suggested, these are within their historical average.