In the first half of 2014 housing construction grew by 30% and 27% for apartment buildings, compared to the same period last year.
The balance between the demand for houses and apartments is very equal, depending on the geographical area; generally there are more apartments in the capital and more houses in the countryside.
Elisa Suarez Gomez, executive director of the National Board of Housing Promoters told Panamaamerica.com.pa that "...
In Panama entrepreneurs are anticipating increases of between 6% and 12% in home prices in the coming months.
The increase in the prices of materials such as concrete, gray cement, sand and stone, among others, is one of the factors that is pushing up the prices of homes, both those for social interest as those aimed at the middle and upper classes.
The balance of loans granted by the banking system to the construction sector increased from $2.598 billion in April 2012 to $3.830 billion in the same month this year.
Loans for infrastructure were the only ones which showed a reduction in the period in question, going from $593 million to $377 million. Loans for housing, businesses and other categories showed increases.
20 years ago for every apartment for sale in a high rise building there were 9 houses on offer, whereas today the ratio is 50-50.
The construction of residential buildings in the city has been driven by the increased purchasing power of immigrants and the integration of the underground transport system.
Nowadays people prefer to buy a home that is close to the areas where they are underground stations.
House prices could increase by as much as $7000 because of underground cables laying, now postponed until January, in new residential complexes.
The Ministry of Housing and Territorial Ordinances has decided, along with promoters of urban projects, to postpone until January 2014, underground cable laying which was scheduled to start on September 1.
The Panamanian Congress is debating a bill which would raise the ceiling for home purchase loans with preferential interest rates of 4% to $80,000 .
From a press release issued by the Ministry of Economy and Finance in Panama:
The law, which amends the second tranche of preferential interest rates for home loans home valued at an amount of between $40,000 to $80,000, was approved in its first debate in the Committee of Economy and Finance of the National Assembly.
The increase of more than 5% in the cost of construction and the revaluation of land in the capital, has made the social housing segment unprofitable for builders.
"In its projections for 2013, the National Housing Council (Convivienda) a guild that brings together the leading companies involved in the construction of family units will build 8,206 dwellings (houses and apartments) with a total investment of approximately $800 million.
For promoters in Panama, construction of social housing is no longer profitable, mainly because of the high cost of materials and construction supplies.
"... only about eight years ago there was a proliferation of developments in the areas east and west of the capital with average sales of between $18,000 and $25,000. That boom was quickly supplemented by new access roads and shopping centers which led to the houses in the same areas now having a smaller size in terms of the construction area and available land, while seeing their prices increase," reported Capital.com.pa.
In areas of Panama City and San Francisco, Betania, Bella Vista and Parque Lefevre, several building projects are being held back because of lack of sewerage capacity.
According to some developers, officials and planners, there are some plans which will take five months to gain approval from the Institute of Aqueducts and Sewers (Idaan).
Prensa.com reports that "The Idaan is suggesting to developers that they themselves build the necessary infrastructure to connect to sewers where there is capacity or invest in treatment plants for each project."
At the end of 2012, the luxury Class A apartments accounted for 78% of the units under construction, while the Classes B and C together accounted for 22%.
According to a residential market study prepared by the firm CB Richard Ellis Global Research and Consulting (CBRE Panama), at the end of 2012, luxury apartments categorised as Class A, were the most popular in the residential market in Panama, representing 78% of the total units under construction. Meanwhile, Class B and C apartments, amounted to 22%.
Following the results from 2012, which confirmed the recovery of the sector, it is predicted that in 2013 home sales will increase by up to 16%.
Panamaamerica.com reports that Miguel De Janon, president of Convivienda stressed that "the levels achieved last year broke anticipated expectations."
According to estimates from the National Housing Promoters Council (Convivienda), in 2013 growth will continue, and home sales will grow by 16%, a rise of 3% compared to 2012.
The National Council for Housing Promoters in Panama is made up of 22 Developers and 9 Banks, who are united by quality and accountability requirements.
An article in pa-digital.com reports that "57% of everything that is built in the Republic of Panama is developed by members of this union whose promoters have been in the housing market for over 50 years."
The Panamanian group of companies, Convivienda projects sales in 2012 amounting to $665 million with the delivery of 7,429 homes.
The director of the national council of housing developers, explained that the with the Preferred Interest Act raising the ceiling on the value of homes which can benefit to $120,000 will help... "the middle class above all, because there are more chances to get a house for a longer period", reported Panamaamerica.com.pa
The crisis in Europe, North America and Venezuela is dampening the dynamism in the real estate sector whose sales depend heavily on these markets.
In the first six months of 2011, of the total amount of real estate transactions only 2% related to the sale of luxury real estate projects.
The executive director of the National Housing Promoters (Convivienda), Elisa Suarez Gomez, said that building of luxury residences has been reduced in the first half of the year. "... In luxury segments, those costing upwards of $350,000, sales depend heavily on the foreign market, so the crisis in European countries, Canada and Venezuela, has made for significant changes in the sales process", said the director to Panamaamerica.com.pa
The association of builders known as Convivienda plans to develop 44% more homes in 2011 when compared to 2010.
These companies, which represent 54% of the metropolitan home building market, built 5.050 new homes in 2010.
Elisa Suarez, executive director, told Prensa.com: “we are experiencing growth, albeit a slow one, away from the 2007 rates (12%), which were the best of all time”.