Housing prices have risen significantly in Colombia due to a stronger economy helped by the election of new president Juan Manuel Santos in 2010.
Due to property prices in Colombia rising rapidly, many people say Colombia is in a property bubble, meaning it is the wrong time to buy. However, other economists suggest otherwise and believe Colombia has not reached its bubble yet, and is fact going through a boom period when it is the perfect chance to buy property.
President Santos has also improved housing for the Colombian poor by helping them attain cheaper housing to try and clear the favela type slums.
Real estate prices began rising in 2002 and went up 20-25% in that year alone. From 2003 to 2007 housing prices rose annually by around 10-15%. During the financial crisis in Europe and the U.S., property prices stayed pretty much the same.
Expats will find that it is especially in Medellin, the "Beverly Hills of Colombia", that house prices are rising most rapidly. Because of this, many Colombian residents are awaiting the bubble to form and house prices to collapse.
However, as the cost of living is relatively low in Colombia and wages are increasing, with the annual inflation rate at 3-4%, the increase in housing prices reflects the rise in salaries. Taxes are also relatively low in comparison to the rest of the world, 1-1.5% per year, paid quarterly. Utilities such as water and electricity are also quite cheap in comparison to other countries, so living is cheap in relation to the price of buying property.
Although mortgages are practically impossible to obtain in Colombia if you are a foreigner, if you are a Colombian national, you’re in luck. Interest rates on mortgages are relatively low for Colombians and there are construction projects that offer a way to finance over 1-2 years if they do not qualify for a mortgage.
There are two convincing arguments about Colombian real estate market and if it is about to experience a bubble or is currently booming. If you decide not to buy property and rent instead, you should consult our rental guide.