The president of the Chilean Chamber of Construction (CChC) Chillán, Ricardo Salman, reiterated the union’s concern about the complex economic scenario for the sector, whose recovery continues to be limited by the impact of credit restrictions, such as high interest rates.
“Indeed, 2021 was a very good year, and in 2022 there was a drop and this year there will be a significant drop and probably the next one as well. In fact, we have not been able to recover the building permits in terms of square meters approved since 2019. In the years 2020, 2021 and 2022 they fell to half of what we had in pre-pandemic, that is, in 2019, and that it has recovered marginally beyond 50% of those previous indicators”, stated the union leader in an interview with Radio La Discusión.
Salman explained that “this responds to the difficulties that our country is facing today and that it was a problem for the whole world: the rise in construction material costs, which is an issue that is already more controlled, has stopped rising significantly.” important, since the increases are more marginal, they are normal. Transportation costs and international freight also fell, we are already within values close to those of pre-pandemic. So, that pressure is no longer there, but we know that the interest rate is still too high to precisely control inflation and that it has also hit the companies very hard, because the Construction Cost Index was in the order of four times higher than the CPI, therefore, although the values of the homes were in UF, they were not readjusted, which increased costs”.
The CChC helmsman Chillán acknowledged that, due to the impact of rising costs, “unfortunately, there were many projects that fell by the wayside and other companies that went bankrupt. Naturally, the sector is weakened, but recovering”.
In this sense, he valued that “there has been a response from public policies to address these higher costs, that has also been partially resolved. But there are other variables that affect. For example, VAT has recently been added to construction, gradually it was applied and in this last stage, which began this year, VAT also affects even social housing. Those are also higher costs, and in this transition process we have to see how we are assuming it, if there is an answer to assume that higher cost from the state subsidy. So, that is slowing down the start of the works, and we have this problem at the national level”.
Salman summarized that “first there were the costs, then various reforms and then the issue of the interest rate, which is what is slowing down the entire sector, because construction and real estate companies not only have a high rate to face, but also higher rates.” difficulties in accessing financing, many more conditions to meet and other restrictions, because simply, even if you meet the best conditions or meet the requirements that were previously required, financing is simply not being approved today, due to the uncertainty that exists. The banks have cut their losses, and they see that, if there is a risk of companies going bankrupt, without an individual analysis, we have a generalized restriction on financing and that situation is very serious, because in the end the bank is becoming a participant in the problems that companies face today.
