People in Mexico are more optimistic about the economic outlook as employment is recovering and the real estate industry poised for growth, it is claimed.
Government subsidised mortgages are set to give the property market a boost and one of the country’s leading builders believe sales will increase by over 10% this year.
A major building programme is needed as there is practically no inventory in Mexico City and the improvement in the economy is expected to be very favourable to developers.
Jobs may surpass the record 14.48 million this month, according to Labour Minister Javier Lozano. As Mexico, Latin America’s second biggest economy recovers from a 6.5% contraction in 2009, the steepest slump since the 1930s, Finance Minister Ernesto Cordero said that the government may increase its 4.1% growth forecast for this year.
According to Economy Minister Gerardo Ruiz Mateos Mexico probably will add about 750,000 jobs this year by boosting manufacturing sales to the US, which buys about 80% of its exports.
Unemployment is down, it fell to 5.1% in May after reaching 6.4% in August last year, the highest since records began in 2000.
Developer Consorcio ARA said demand for property is high in the capital but slow in some parts of the country, such as tourist destinations and areas where drug related violence is high. But sales increased 2.2% in 2009 and are expected to be up 10% this year.
Mexico’s second biggest home builder, Homex, said it is expecting sales to increase as much as 14% this year, following a 3% gain in 2009, according to chief executive officer Gerardo de Nicolas Gutierrez.
‘The improvement in job creation and recovery has a positive impact on domestic demand and consumer confidence. That has a positive impact on the consumption of goods and services such as housing,’ he said.
The jobs recovery is giving the government’s housing agency, known as Infonavit, more capital to provide mortgages.
There are signs though that consumer demand still lags behind the broader economic rebound. Retail sales unexpectedly fell 0.1% in April from a year earlier. And Mexico’s economic growth is still likely to be below that of Brazil, where the central bank expects a 7.3% this year. Peru’s central bank expects growth of 6.6%, while Colombia’s government forecasts 3% growth.
Real estate will be a major part of the growth as it is estimated that Mexico had a housing shortage of 8.9 million units at the end of 2009, according to Sociedad Hipotecaria Federal, the agency in charge of developing Mexico’s mortgage market.
