New construction plummeting 30%
An article published in the Business Monitor said thattighter credit conditions and sluggish foreign demand have already had an effect o...
An article published in the Business Monitor said thattighter credit conditions and sluggish foreign demand have already had an effect on the lending habits of Panama´s major banking institutions.
Currently, most Panamanian banks will no longer not give foreigners a 20 years mortgage, but only offer 10 years one at a higher interest, which means bigger payments.
The reason for the policy is simple. They need to be sure that they are a good risk and since the majority of foreigners that come to Panama will not work here, are retired or cannot prove that they have a steady income, the banks tend to be more strict.
The Business Monitor article states that the potential damage is difficult to assess at this stage, but there are signs of a slowing market.
The value of new construction projects fell 23.8 percent in September, the largest monthly drop in thirteen months.
The situation in Panama City is even worse with the total value falling by 30.6 percent.
The article pointed out that ominously, the last time the United States suffered an economic contraction in 2001-2002, Panama’s construction output caved in, contracting by 29.8 percent in 2001 and only returned to positive territory two years later.
The Business Monitor said that with the global economy in a much worse-off state this time around, it may be time for Americans to shelve plans for a holiday home in the Central American sunshine
Meanwhile, Jesse Levin from Archer Group Investments said that the market is changing and more foreigners are renting rather than buying, because all the cheap properties are gone and the prices continue to escalate due to speculators, who only put the deposit on an apartment hoping to sell it before the its completion.
Another reason for the property slowdown according to Levin is that people are becoming more cautious and prefer to wait before spending any money in a volatile market.
He concluded by saying that eventually the market will stabilize and properties will be more realistically priced.