The imbalance between housing prices and the decline in construction deepened the housing gap in 2025

The combination of limited supply and demand driven by investment, remittances, and foreign capital is reducing affordable housing options, pushing up prices and rents in central areas, and deepening the housing gap for middle- and low-income households, in the absence of public policies to balance the market.

SANTO DOMINGO. – The contradiction between rising housing prices and the slowdown in the pace of construction in the Dominican real estate market was one of the topics addressed in the November report by the British financial consulting firm Global Property Guide.

The year 2025 presents a stark contrast in the Dominican real estate market: while housing prices continue to rise sharply, the construction faces a profound slowdown .

This imbalance, which might seem paradoxical at first glance, reveals structural tensions in the Dominican real estate market due to the accelerated revaluation of existing units, the scarcity of new supply, and a macroeconomic context that affects the production of new housing.

The GPG signal and local data

According to the latest update of the Global Property Guide (GPG) from November 2025, the Dominican Republic has had exceptional performance in real estate prices in 2025, with a year-on-year nominal variation of residential prices of +10.64% , placing the country among the markets with the highest appreciation in Latin America.

This result not only confirms the dynamism of prices, but also places the country as one of the regional leaders in property value growth , surpassed only by markets with particular conditions such as Costa Rica.

Furthermore, recently published sector reports in specialized media indicate that in urban areas average prices per square meter continue at record highs , with increases for both apartments and houses in 2025, reinforcing this trend of revaluation.

Crisis: what the official data shows

In stark contrast, the construction sector has shown weak activity, raising concerns among economists and planners. According to data from the Central Bank of the Dominican Republic (BCRD) , the construction industry is projected to contract by 2.3% compared to the previous year, despite some efforts to stimulate activity.

This decline occurs in a context where the overall economy has slowed its growth, with GDP expansion decreasing slightly from the first to the second quarter of 2025, which adds pressure to private investment in civil works and real estate projects.

Although certain reports, according to the globenewswire.com suggest that there could be a slight rebound in specific months, as happened with construction activity in July 2025, that increase does not compensate for what has already accumulated during the year.

The liquidity injected by the Central Bank to boost credit to productive sectors, including construction, has had a lukewarm reception in practice, with developers pointing out that the cash does not always reach the projects that need it.

Prices vs construction (2024–2025)

Note: Price data is nominal; construction data shows actual activity variation.

What does this contradiction reveal according to GPG?

1. Revaluation driven by limited supply

A key explanation behind the price increase is the shortage of new and well-maintained used housing , which is putting upward pressure on available values. With fewer projects underway, competition for existing properties may be driving prices higher than actual construction activity.

Some sector reports have noted a marked drop in the production of low-cost housing, indicating a polarization of the market:

• drastic drop in economic units,
• while the middle and upper segments maintain dynamism.
• 2. Higher cost of materials and labor

Another source of upward pressure may be rising construction costs . Although cost data shows mixed variations throughout 2025, recent history reflects significant cumulative increases in materials and other inputs, complicating the start-up of new projects.

This environment of high costs and uncertain returns can discourage builders, especially in lower-margin segments.

3. Macroeconomic conditions and more restrictive credit

With high real interest rates and an uncertain global economy, both households and businesses have scaled back their investment plans for new construction. The combination of more expensive credit and reduced appetite for debt is dampening activity in the construction sector.

4. Profile of the Dominican real estate market

The local market has shown mixed patterns: while premium segments and those geared toward foreign investment continue to rise in value, the affordable segment appears stagnant or even disappearing altogether. This could exacerbate the affordable housing gap.

Implications for supply and demand

The combination of high prices and low production can create several effects:

• Growing shortage of affordable options for middle and low income buyers.
• Market dominated by investment and speculation , where demand comes more from external capital and remittances than from typical local buyers.
• Pressure on rents and prices in central neighborhoods , reducing residential mobility.
• Risk of widening the affordable housing gap if active public policies are not implemented.

The combination of limited supply and demand driven by investment, remittances, and foreign capital is reducing affordable housing options in the Dominican Republic, putting upward pressure on prices and rents in central areas and deepening the risk of a housing gap for middle- and low-income households, in the absence of public policies that balance the market.

Opportunity and challenge, for whom?

For real estate investors, the outlook could be attractive: sustained appreciation and limited supply create a favorable combination for preserving value. Those who buy now could see significant gains in the medium term, which is why the GPG portal recommends that investors buy now.

However, for most Dominicans and for social equity, this contrast is a warning sign:

Without a sustained reactivation of construction and measures that incentivize affordable housing, the market risks becoming increasingly inaccessible to a large part of the population.

Regardless of who benefits from it and whether it's to everyone's liking, the reality of this 2025 contrast— prices continuing to rise while construction has almost stalled—deserves serious attention, as it represents one of the most significant shifts in the recent history of the Dominican real estate market and poses a structural challenge to housing and urban development policy.

But for the country, the divergence between prices and production is a warning: without a sustained reactivation of construction and policies that incentivize affordable housing, the market risks becoming increasingly inaccessible to a large part of the population, and the housing gap, which is measured in millions of homes, could widen.

Price and construction trends in the Dominican Republic (2024–2025)