With high inflation in construction materials and the increase in financing costs for housing developers, investment channeled into works to build houses and apartments had its steepest drop in almost three years.
On Friday, February 2, the National Institute of Statistics and Geography (Inegi) announced that gross fixed investment in residential construction fell 5.9% in November compared to last October, its worst performance since December 2020, when it decreased 7.8%. %.
In their report on the real estate situation in Mexico for the second half of 2023, the BBVA bank analysts pointed out that the supply of houses and apartments has not been able to recover, according to figures from the statistics agency in Mexico.
The decrease in the value of housing production is caused on the one hand by the inflation rates of construction materials observed last year, together with the increase in financing costs for developers, explained the private bank analysts.
When reviewing the growth trajectories of compensation for employees in recent years, the bank’s experts found that “the income of employees has fallen far behind the price of housing.” This implies that, although there is an intention to purchase, household income is not sufficient to purchase the home that is required.
Inegi also reported in its recent report that gross fixed investment in non-residential construction, related to public spending such as the Dos Bocas refinery and the Maya Train, fell 0.1% in November.For its part, capital placed in machinery and equipment made in Mexico increased by 1%, while investment in imported goods decreased by 0.1%. This is despite the appreciation of the peso against the dollar, which makes products brought from abroad cheaper.
In general, total gross fixed investment fell 1.3% in November, after growing 1.7% in October, according to the results of the Monthly Indicator of Gross Fixed Capital Formation, which allows us to know the behavior of investment in fixed assets in the short term.