The construction trade union intends to sell around 6,000 homes in 2018, a figure which is 20% higher than the amount of units sold in 2017.
For the construction sector, the year starts with the Expo-Casa fair that will be held in February, 60 urban projects will be included in the event and it is expected that 250 houses will be sold.Representatives from the Chamber of Developers of Nicaragua (Cadur) estimate that during Expo-House around $10 million worth of mortgages will be sold, and for the sales projections of 2018 the amount of the credit could reach $170 million.
In Nicaragua, incentives for financing and construction are driving growth of the real estate supply, especially the development of multifamily complexes.
A recent reform of the special law to promote financing and construction of low-income housing explains the strong momentum that the activity has seen in recent months.
Héctor Lacayo, president of the Chamber of Developers (Cadur), explained to Elnuevodiario.com.ni that "...Starting in 2018 in the capital, at least six new housing projects will be developed, they are classified as multifamily units, in addition to the two that have already started to be sold this year and which are onthe outskirts of the city."
The 2018 budget for the Nicaraguan Institute of Urban and Rural Housing includes $12 million to be granted in subsidies and loans for the purchase of low-income housing.
The funds will be allocated among low-income families for the purchase of homes categorized as social interest, in the form of mortgage loans through financial institutions and subsidies.
The nicaraguan government has announced a new subsidy on the interest rate for apartments´purchases worth up to $50,000 and constructed within buildings with no more than four floors.
In addition to this new incentive to purchase housing classified as social interest and in high rise form, the Ortega administration has announced that it will expand from $32 thousand to $40 thousand the maximum value of high rise housing that is eligible for the current interest rate subsidy.
Through a trust belonging to the Nicaraguan Institute of Housing $31 million will be available to finance the purchase of social interest housing, with a fixed interest rate of 7.5%.
Like the construction sector, banks have started backing financing of social interest housing.In the first half of the year, loans granted for the purchase of this type of housing registered an increase of almost 17%, according to reports from the association of developers.
The association of urban developers is organizing for September 8th, 9th and 10th an exhibition of the main private real estate projects under development in the country.
The XXII National Housing Fair will be held at the Crowne Plaza Convention Center, and is expected to include the participation of more than 60 housing projects located in Managua and other cities such as Granada, Jinotepe, Masaya, Leon, Chinandega, Rivas, San Juan del Sur, Estelí and Matagalpa.
The construction sector proposes extending the conditions of social housing loans to a larger segment of the population, in order to promote the sale of houses with prices of between $30 thousand and $50 thousand.
The association of developers is proposing that the interest rate benefit of 2.5% and the exemption from the registration costs that are currently granted to those who purchase social housing worth up to $23 thousand, be extended to more expensive homes, worth up to $50 thousand.
The construction sector expects an increase in demand now that there has been an official increase from $20 thousand to $23 thousand in the ceiling for the price of social housing.
In addition to raising the cap so that more homes are considered of social interest and can be purchased with a subsidy on the interest rate, it was also agreed to grant a direct bonus of up to $2,000 for families to finance the purchase of a home of this kind.
Financing for housing and sustainable urban development will be the topics under discussion at the event to be held on August 22 and 23 in Managua.
The Chamber of Builders in Nicaragua and the Inter-American Housing Union are organizing the event, which will bring together professional financial real estate companies, developers and builders, banks and finance companies, savings and loans companies for housing, cooperatives, investors, and representatives of public entities.
In Nicaragua two microfinancers will provide short-term loans for progressive housing construction.
The Microfinance companies which up until now have focused on short-term loans to individuals and microenterprises outside of the banking system, will begin to break into the housing market, offering loans for home improvement and construction.
Elnuevodiario.com.ni reports that "...The Nicaraguan Association of Microfinance Institutions, Asomif; the Central American and Caribbean Network for Microfinance, Redcamif, and the organization ADA from Luxembourg selected on Friday two microfinancers in the country that will provide housing loans. "
The recently approved amendment to the Housing Act provides a subsidy of 2.5% in the interest rate for mortgage loans that are not greater than $32,000.
Responding to industry demands and seeking to motivate the new housing market, the recently approved reform also provides, as well as the subsidy, that any bank can apply the exemption of 15% from Value Added Tax (VAT) for mortgage loans with this same ceiling rate.
They were built to be sold using government subsidies, but an increase in the cost of building materials has pushed their real price above the limit established by the law.
The Government is maintaining its position of not raising the price ceiling of $20 000, stating that this would not benefit poor families, but recognizes that it must find a solution to the problem.