Why Mexico's Home Construction Hits an All-Time Low
Mexico's affordable housing production hits record lows, raising concerns for the industry. Demand falls due to the low credit capacity of buyers, urging collective action to revive the housing sector.
Despite a rise in employment figures, the housing sector in Mexico, especially the construction of affordable homes, faced a significant setback in the first half of the year. The situation is particularly concerning in Nuevo León, which has been a key reference for housing development in the country.
According to data from the Single Housing Registry (RUV), the national production of houses from January to June amounted to 60,822 units, marking a 9 percent decline compared to the same period last year. This translated to a worrisome shortfall of 6,033 homes. What is even more alarming is that the number of affordable housing units constructed plummeted by 26 percent to 21,932 units. This represents the lowest volume of affordable housing built since 2010, a stark indication of the growing housing crisis.
Unsurprisingly, this decline in production has had a significant impact on the overall composition of the housing market. The share of affordable homes in the total number of houses constructed throughout the country fell from 44 to 36 percent. This marks the lowest level in the last 14 years for the first half of the year.
In Nuevo León, a state that has long been a benchmark for new housing in Mexico, the situation mirrors the national trend. In the same six-month comparison, housing production dropped by 9 percent, resulting in a total of 10,230 units, nearly a thousand units less than the previous year. Within this total, 4,888 units were classified as affordable housing, indicating an equivalent 26 percent decrease. As a consequence, the share of affordable homes in the overall number of houses built in the state over the past year fell from 59 to 48 percent.
Industry experts and housing developers are expressing growing concern over this downward trend. They highlight that the primary cause of this contraction is the lack of demand, which stems from the low credit capacity of potential homebuyers, particularly those relying on housing agencies such as Infonavit. Infonavit, as the principal distributor of mortgages in Mexico, held a substantial 51 percent share of the market in 2022. However, the credit capacity of beneficiaries has not kept pace with the rising prices of homes, creating a significant disparity.
Developers emphasize the urgency for collective action from various stakeholders, including the government and industry organizations. There is a pressing need to address the existing challenges and find viable solutions to revive the production of houses in the country. One such solution could involve aligning the credit capacity of potential buyers with the prevailing housing prices, making it more feasible for people to invest in affordable homes.
The decline in the construction of affordable housing not only affects the real estate industry but also has wider implications for society and the economy. Access to affordable housing is essential for citizens' well-being and financial stability, as it directly impacts their quality of life. Furthermore, a thriving housing sector contributes significantly to the nation's economic growth and stability, creating job opportunities and stimulating related industries.
As stakeholders come together to find solutions, it is crucial to strike a balance between market demand, credit availability, and housing prices. By doing so, Mexico can pave the way for a brighter future where affordable homes become accessible to a broader segment of the population, boosting both the housing industry and the overall economy.
