Housing costs soar in the Dominican Republic

Santo Domingo.- The cost of building a home in the Dominican Republic is on the rise. According to the National Office of Statistics (ONE), the direct construction cost index for housing increased by 7.82% year-on-year in July.

The Direct Housing Construction Index (ICDV), a benchmark that tracks monthly cost variations for building homes, stood at 233.84 in July, representing a 0.31% increase from June.

Single-level homes saw the most significant cost increase, rising 0.45% compared to June, followed by four-level multi-family homes, which experienced a 0.34% increase.

These figures do not include indirect costs such as land, design, construction permits, financing costs, and contractor profits.

A breakdown of costs by category shows that construction materials experienced the most significant increase, rising 0.51% between June and July. While materials and labor costs climbed, machinery and subcontracting costs saw slight decreases.

Specific products that saw the largest price increases during this period include electrical wires (8.87%), cement and adhesives (2.53%), plumbing equipment and appliances (0.65%), and floors and ceramics (0.44%).

In addition to rising construction costs, both builders and buyers are facing higher interest rates, which further impact the final price of homes on the market. Mortgage interest rates averaged 12.65% in July, an increase of 0.45 percentage points compared to June.

The Dominican Republic has a total of 3,694,060 private dwellings, with single-family homes accounting for 66.1% of the total. While the demand for housing remains strong, rising costs and interest rates are likely to dampen market activity in the coming months.

The Central Bank recently announced a reduction in its monetary policy rate, which could lead to lower interest rates for both consumers and businesses. However, the full impact of this decision on housing costs remains to be seen.