Financial institutions lent 15% less for building houses in 2011, complained the Chamber of Construction.
The Salvadoran Chamber of Construction Industry (Casalco) reported that the portfolio of loans for housing construction experienced a decrease of 15% in 2011, as banks only granted $113.9 million.
At the presentation of an institutional report, the executive director of Casalco, Ismael Nolasco, said the bank had chosen to lend to housing developments for the middle class segment and above, which represented a lower risk. On the other hand, some builders have chosen to develop small projects with their own resources, reported ElSalvador.com.
Despite some signs of recovery, mainly in public works, the industry continues to stagnate, as shown by credit indicators for construction.
Between January and May 2011, banks lent $7.4 million for housing projects, 73% less than in the same period last year, when loans were for $27.7 million.
With regard to house buying, the situation is totally the opposite.
Low public investment and limited access to credit are the main problems, construction companies say.
Ismael Nolasco, head of the Salvadoran Construction Chamber (Casalco), urged the government to begin as soon as possible a number of construction projects pending execution.
Executing all the subprojects in the social housing initiative dubbed “Casa para Todos” would be of great help to restart the sector, argued Nolasco.
In the absence financing solutions, the construction union sector initiated meetings with private banks.
The Salvadoran Construction Industry Chamber (CASALCO) is not seeking massive loans, but more flexibility in granting credit.
La Prensa Grafica published on its website: According to Nolasco, the hope is to find new funding mechanisms in private banking, as well as to know what the requirements are to gain access to resources.
The prospects of the construction sector for this year are a 4% decrease.
Ismael Nolasco, executive director of the Salvadoran Construction Industry Chamber (CASALCO) informed Elsalvador.com: "There are no closed businesses, but 30% of them just pay taxes and services and go to the office because there is no work; sector outlook for this year is that there will be a 4% decrease and this estimate translates into businesses closing."
There are 19 housing projects which would generate about 2,400 houses in different market segments that are stagnant.
Ismael Nolasco, executive director of the Salvadoran Construction Industry Chamber (CASALCO) detailed in Elsalvador.com: "Eleven projects are already in the process of analysis in the Multisectoral Investment Bank (BMI), which is responsible for "banking" the projects, meaning that it looks for funding options.