Colombian authorities in February approved permits for construction on
33% less area than in the same month of 2008 as the area covered by
housing permits fell, according to government figures released Tuesday.
Permits covering 912,829 square meters were issued in February, the
National Statistics Department, or DANE, said. The area covered for
housing decreased 31% to 671,750 square meters.
Construction licenses issued in the 12 months to February covered
16.10 million square meters, 16% less than in the 12-month period
through February 2008.
In the first two months of the year, construction licenses declined
31% to 1.97 million square meters from the same period in 2008.
Jorge Cortes, analyst at investment bank Corficolombiana, estimates
the construction sector will fall 0.5% this year compared to a 2.8%
expansion last year.
“As Colombia’s unemployment level increases, sales of houses and apartments fall,” Cortes said.
Additionally, construction companies will find more it difficult to
raise capital as financial sector is more cautious about lending money.
Daniel Nino, head of research at the country’s largest bank,
Bancolombia, believes Colombians will await until the central bank more
aggressively cuts its benchmark interest rates so that mortgage rates
drop.
The Colombian central bank has cut rates by 300 basis points since
December to 7%, and the majority of analysts believe the monetary
authority will trim rates by an additional 100 basis points on April
30. (Dow Jones)