SANTO DOMINGO.– An economist and three construction industry associations yesterday praised the measure adopted by the Central Bank of the Dominican Republic, which releases 21.424 billion pesos from the legal reserve requirement for the construction and acquisition of low-cost housing.
“This is a very wise measure because the construction sector relies on demand for accessible credit with favorable terms. Releasing these resources from the legal reserve requirement means that the real estate loan portfolio expands, so all that is needed is for the interest rate to be attractive to stimulate credit demand and facilitate the purchase of new homes, thus revitalizing the construction sector, which, according to recent reports from the Central Bank of the Dominican Republic (BCRD), has registered a slowdown in growth from 23.4% in 2021 to just 2.1% in 2022,” said economist Francisco Tavárez.
For the Dominican housing construction sector, this decision is of utmost importance and comes at the right time, said Jorge Montalvo, president of Acoprovi, the Association of Housing Builders and Developers, who indicated that it comes after a 2022 in which high prices prevailed in construction materials and increases in interest rates “resulting from the successful restrictive monetary policy, necessary to control inflation.”.
Eliseo Cristopher, president of Copymecon, the Confederation of Small and Medium-Sized Construction Companies, views the decision very favorably, although still in its early stages. However, he understands that it is a first announcement, that the year is young, and that the expansionary policy of the construction sector must continue, so he applauds the announcement.
“The Association of Housing Developers and Builders of the Cibao Region (APROCOVICI) welcomes the resolution issued by the Monetary Board and the Central Bank regarding the legal reserve requirement for financing low-cost housing. The easing of this policy is considered a significant incentive for financial intermediaries to channel resources to the strategic construction sector, which has been severely impacted by the unprecedented price increases in raw materials caused by the pandemic.”.
Economist Tavarez explained that the reasons for the slowdown in the construction sector are well-known, citing among them the rise in interest rates that has made credit more expensive, affecting the demand for new properties. “Therefore, this measure seeks to curb this slowdown trend in a key subsector of the economy for 2023,” he stated.
Acoprovi explained that considering that 7 out of 10 homes sold in the country are financed through bank loans and that most housing developers use financing to build their projects, the Monetary Board's resolution opens up more opportunities for Dominicans to have greater access to decent housing.
“Therefore, we reiterate our commitment to the country and to our authorities to continue boosting the housing sector and we applaud this new measure for the benefit of all families who dream of owning their own home,” highlighted architect Montalvo.
The organization that represents builders in Santo Domingo congratulated the entities involved and expressed its commitment to continue helping Dominicans achieve their dream of owning a home together.
“The released funds can be used by multiple banks and savings and loan associations for interim loan financing for housing construction, which will contribute to job creation and the movement of commercial activities in different sectors, thus accelerating this pillar of the Dominican economy,” he added.
Aprocovici
Alejandro Fondeur, president of Aprocovici, stated that given the global recession and the difficulties developers and buyers have faced in recent years, access to housing financing at a preferential interest rate of no more than 9% will help to boost the economy, stimulate job creation, and reduce the housing deficit, estimated at over 1.5 million homes.
He stressed that to effectively solve the housing deficit, this facility must be expanded so that the middle class, with a higher rate of banking, can access a real estate offer suited to their needs and lifestyle.
“We urge that the inclusion of other social classes in this financial measure be evaluated, so that more Dominicans have the opportunity to own their own home,” Fondeur stated.
