Jorge Wolpert
Director General
Conavi
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View from the Top

Subsidized Housing Providing Returns

Thu, 01/11/2018 - 10:35

Q: What is your assessment of the national housing policy and its impact on Mexicans’ ability to acquire homes?
A: I think we have made significant progress in managing incentives for social housing. We now have a progressive subsidy program whereby, for each MX$1 invested by the government as a subsidy, MX$4-5 is returned to the economy. Our welfare policy applies to people who have a previous mortgage, helping the industry generate more supply and benefiting federal finances as it also represents an investment. Our main objective is to put the lowest income families at the center of housing policies.
In our 12 years of operation, subsidies have become more progressive. The New Housing Public Policy, implemented around five and a half years ago, differs from previous policies as it establishes a territorial view. A new ministry, SEDATU, was created for housing policy to follow an urban development view. By evaluating the successes and failures of our past policies, we were able to focus on two aspects that have had very positive results. First, to make housing solutions more environmentally friendly and sustainable. Second, we have evaluated the quality of the spaces that social housing provides, so houses accompanied by a social incentive have at least two bedrooms, providing a better quality of life to residents. This has proven to be effective so we want to encourage bigger living spaces.
I think it is essential to design specialized programs targeting the poorer part of our Mexican population to give them the opportunity to buy a house or to build one on their own land. Also, we should enable their ability to enhance and extend their existing homes. The self-production model implies self-construction with the guidance of experts helping users build their house on their own land. This subsidy model was put on the back burner, as only 9-10 percent of our budget was allocated to it, but we decided to double it to 20 percent in 2017. The result has been amazing. There was substantial demand and an equivalent supply to ensure our subsidy was progressive.
In 2018, we launched a different model to allow nonaffiliates to buy a house. These people have no savings account in INFONAVIT and FOVISSSTE and are the largest and most overlooked segment in the country. The next social housing revolution represents the people who need a house and have the human and constitutional right to it. These people have the means and the need but lack access to credit. It is our duty to make sure they get it, which is the legacy that I want to leave to Mexicans. By the end of 2018, we expect to have provided more than 5,000 subsidies under this model and while now it is a special program, we hope that it becomes a mainstay in the future.
Q: What is CONAVI’s shared agenda with developers, constructors, development banks and other public institutions?
A: I believe the development of the national housing policy is a team effort. We are in constant communication with housing developers, banks and financial institutions. This allowed us to provide larger loans, as the average price of a social house varies from US$16,000-US$20,000. The banking system has become more involved in providing credit to low-income and nonaffiliated families. We hope this collaboration will continue in the future to give more Mexicans the possibility to meet their housing needs.
Also, CONAVI maintains a daily dialogue with INFONAVIT and holds a weekly meeting with FOVISSSTE, among other government institutions. I think we are all very well-coordinated under SEDATU, which yields a robust general public housing policy. We work the closest with INFONAVIT, as we focus our incentives on lower-income families. For example, in 2018 we developed a program for the lower income INFONAVIT beneficiaries. Those people who earn less than 2.2 times the Unit of Measurement and Update (UMA) in Mexico cannot afford a house even with INFONAVIT’s credit and our subsidy, so we increased it from MX$67,000 to MX$100,000. We will also add about 12,000 subsidies a year to this program.