By Joan Feliz
Special for El Inmobiliario
Housing construction, a key driver of development in the Dominican Republic, is experiencing a crisis marked by the sustained increase in construction material prices. This has not only driven up project development costs but has also had serious consequences for buyers, who end up bearing the brunt of these increases in the form of exorbitant final prices. Furthermore, this phenomenon is linked to a rise in contract breaches in the real estate sector and the disappearance of affordable housing, a crucial option for the most vulnerable families.
The escalating costs of construction materials
Data from the National Statistics Office (ONE) and the Direct Housing Construction Cost Index (ICDV) reveal that the cost of materials such as steel, cement, and concrete blocks has increased by more than 45% between 2020 and 2024. Steel, vital in construction, has gone from costing RD$65 per pound in 2020 to more than RD$100 in 2024, an increase of more than 50%. Meanwhile, cement, whose bag cost RD$330 in 2020, now exceeds RD$500.
The impact of these increases on the total cost of a project is dramatic. According to ACOPROVI, the Dominican Association of Housing Developers and Builders, the average construction cost per square meter has risen from RD$25,000 in 2019 to RD$35,000 or more in 2024, depending on the type of project. These increases are closely linked to the global rise in raw material and transportation costs, exacerbated by the COVID-19 pandemic and international conflicts affecting global trade.
Buyers pay the price
For real estate developers, passing these costs on to the end buyer has become the only viable alternative. The price of an average home has increased between 20% and 30% in the last five years, according to figures from the Central Bank. This means that a home that cost RD$4.5 million in 2020 now exceeds RD$6 million. This jump has priced hundreds of families who previously qualified for mortgage financing out of the market.
The problem lies not only in the higher prices but also in the failure to meet buyers' expectations. Many projects initially marketed as "low-cost housing" end up exceeding the RD$5,563,380 limit established by Law 189-11, disqualifying them from tax incentives and making them even more difficult to purchase. This type of non-compliance undermines confidence in the market and leaves buyers in a state of financial uncertainty.
The end of low-cost housing
Low-cost housing, designed to serve low- and middle-income families, is disappearing from the market. Figures from ACOPROVI show that developments in this category have fallen by 25% in the last two years. This is because developers are unable to maintain profit margins in an environment of rising costs.
The result is a market void that directly affects the most vulnerable sectors. Young families, informal workers, and people with limited incomes face increasingly high barriers to accessing homeownership.
Effects on the sector and possible solutions
The current situation demands urgent measures to curb this trend and protect the right of Dominicans to decent housing. Some proposals include:
1. Additional tax incentives: Reducing taxes on essential building materials could alleviate some of the costs for developers.
2. Promote local production: Investment in local industries that manufacture materials such as cement, steel and other inputs would reduce dependence on international markets.
3. Price regulation and contract supervision: Greater monitoring of prices and contractual commitments would ensure that projects do not change their initial conditions, protecting buyers.
4. Expanding the ceiling for low-cost housing: Adjusting the price limit established in Law 189-11 would allow more projects to be included within this category, given the current market conditions.
In several of my articles, I have pointed out how the uncontrolled rise in construction costs jeopardizes access to housing and threatens to make it a luxury for the few. Today, more than ever, an open debate and concrete actions are needed to prevent this situation from continuing to harm thousands of Dominican families.
The author is: MB, Digital Marketing specialist, operations manager of the construction company Incaribe, with more than 10 years of experience in the construction and tourism sector.
