There is a strong increase in housing materials
In the Dominican Republic, a 25.1% increase in the prices of housing construction materials was recorded this year compared to 2019, according to data from the Regional Center for Sustainable Economic Strategies (CREES), which is based on the Direct Cost Index of Housing Construction (ICDV) of the National Statistical Office (ONE).
According to the monthly digital bulletin corresponding to June 2021 of the ONE, the ICDV was 198.46 on average, registering an increase of 5.85 points, compared to May of this year, which was 192.61, when the main increases were in tools, with 48.53%, and in machinery with 6.11%.
In addition, the ICDV recorded a monthly variation of 3.05%. This result is higher than that presented in the same period of 2019, which was 2.38%. By type of dwelling, the ICDV was 205.12 for single-family housing of one level, 197.59 for the two-level single-family house, 193.68 for the four-tier multifamily, and 197.45 for the eight-tier multifamily, or more.”
Representatives of the Dominican Association of Builders and Developers of Homes (Acoprovi) indicated that the increases applied in the main inputs used in the construction sector raised to 31.5% of the costs of real estate projects in execution.
Increase in materials
The fiscal and monetary policies adopted by various countries and the reduction in production raised the international prices of goods and services, as a result of the Covid-19 pandemic, which led to an increase in the prices of raw materials for the construction of a house, such as wood, steel, copper, aluminum and liquid fuels.
In the country, the principal increases were recorded in the blacksmithing subcontract, with 25.50%; natural stones and marmolite, with 19.81%; electric wires, with 13.34%; electrical miscellaneous, with 11.26%; steels, with 10.90%; and wood, with 7.99%, according to the June 2021 Housing Construction Direct Cost Index.
Due to these increases, the Senate of the Republic approved on first reading the bill amending article 129 and paragraphs I, II, and III of article 131 of Law 189-11, of July 16, 2011, for the development of the mortgage market and the Trust in the Dominican Republic, which increases the cost of sale of low-priced homes, from RD$3.5 million to RD$4.5 million.
The purpose of this project is to change the law as mentioned above to increase the reference value of low-cost homes and exempt from the payment of real estate transfer tax to first-time home acquirers through trusts.
This article of Law 189-11 states that low-cost housing projects are housing, with the participation of public or private sectors, whose units will have a sale price equal to or less than RD$4.5 million, a rate due to current inflation will be adjusted annually.