The restriction of loans for house purchase by banks, together with the lower demand for rentals is keeping the sector depressed.
Tuesday, August 16, 2011
According to estimates by the Salvadoran Chamber of Real Estate sales and rentals of houses have fallen by 40% since 2009.
An article in Elsalvador.com reports that José Ventura Salvadoran president of the Chamber of Real Estate (CSBR) said, "although the housing deficit totals 444,000 homes, according to the Department of Housing, 'restrictive policies and the strict criteria of the banks for loan approvals, even to customers who before the crisis were guaranteed approval, has reduced the number of Salvadorans who can afford a house. "
According to the Salvadoran Chamber of Construction (Casalco) the monthly average loans for house purchases in May 2011 totaled $19.47 million, three million more than last year. However, the average is still far from the $33.85 million a month handed out by financial institutions in 2008. According to the union, the 2,796 loans approved in the first four months of 2011 totaled $97.37 million, according Casalco, $32.27 million more than in the same period in 2010.
Although renting a home is one option for a Salvadoran families, Ventura explained that the crisis has also caused a decline in this area too, because due to low demand, ‘if a homeowner wishes to rent he/she must accept that the price has fallen by between 20% to 40%’, he explained."
The Inter-American Development Bank has loaned $35 million to a cooperative to be used to grant housing loans under $109,000.
Of the total loan, $25 million will be administered by the National Cooperative of Educators (Coopenae) and the remaining $10 million by other entities.
Up to June banks had only provided financing for housing projects worth $14.36 million, while in the same period last year it had already reached $32 million.
"The new housing projects can be counted on the fingers of one hand," said the executive director of the Salvadoran Chamber of Construction Industry (Casalco), Ismael Nolasco, adding that the drop is a reflection of an industry that is not investing in large housing projects because it has seen any demand.
Since 2008, more people have applied for loans to buy pre-owned homes than for new ones.
According to data from El Salvador's Social Housing Fund (FSV), in 2006 of 1,520 registered loans, 1,169 were for a new home. In 2008 the trend changed with more mortgage applications for pre-owned houses.
Salvadorans are gearing more towards renting homes, as buying real estate is becoming increasingly difficult, due to little credit and complicated paperwork.
Additionally, banks are lending little money to build new homes. According to Casalco (Salvadoran Chamber of Construction), home building loans have dropped 73.4% in the first quarter of 2010.
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