THE HOUSING MARKET IN COLOMBIA: Socioeconomic and Financial Determinants

This document provides an overview of the housing system in Colombia and explores its socioeconomic and financial determinants. Our recommendations aim at improving basic data collection regarding the construction sector, household socioeconomic conditions, and mortgage markets. We also estimate a simultaneous econometric model for the housing market in Colombia covering quarterly-data over the period 1991-2004. On the demand side, we found that area of approved-licenses is highly elastic to households ’ disposable income, prices of new-housing, and real interest rates charged in mortgage credits. On the supply side, we found a high input-cost elasticity and a moderate response to wealth effects. These results proved to be robust to different proxies and diverse estimation procedures