The Mexican government recently announced it will up its housing subsidization commitment by 25.9%, effective immediately, in an effort to help its flagging real estate market. The $115 million payout will be available for building projects near current school and office zones in addition to funding options for builders. Officials say the shift in focus is in response to the failure of the last bailout plan, which funded cheap suburban homes that now stand empty. Officials say they hope to provide more homes where people want to live so that it may help jumpstart the country’s residential real estate market. For more on this continue reading the following article from Property Wire.
The government in Mexico is to provide billions of pesos in extra housing subsidies in a bid to boost the country’s real estate market.
The government said it would offer 1.5 billion pesos (US$115.16 million) in additional housing subsidies, a 25.9% increase on what has already been allocated this year to help the property sector which has been suffering from slowing sales and liquidity problems.
The subsidies will be available immediately, along with new financing options for builders that develop projects in line with the government’s new priorities.
Land development minister Jorge Carlos Ramirez, told a press conference that the government wants home builders to focus on infill developments in urban areas. This is a change of tack after its previous housing plan that prioritized cheap suburban homes in the last decade has not worked, leaving thousands of empty homes.
Ramirez said that 68% of the land recently compiled in a registry will qualify for subsidies and development that could qualify includes those close to places of employment and schools. Developments will be assessed on a points system, with greater subsidies being available to homes in well laced developments, he explained.
Some 5.8 billion pesos in subsidies have already been offered this year and the new allocation will bring the total close to last year’s rate of subsidies of 7.5 billion pesos.
Mexicans are increasingly choosing to look for homes closer to offices and schools, which has caused sales of cheap suburban homes built by the country’s largest home builders to plummet in the last year.
Mexico’s three largest homebuilders, Geo, Homex and Urbi, are facing a liquidity crunch and seeking to restructure debt.
Home builders that develop homes that meet the new government requirements in terms of being nearer to workplaces and schools, will also qualify for new financing programs.
Mexico, which is Latin America’s second largest economy, has a housing deficit of about nine million homes, according to recent government estimates.
This article was republished with permission from Property Wire.