real estate

Most loans are for Panamanians

David Mesa/la prensa

going up:Most mortgages issued by Panamanian banks were for less than $100,000. Bankers say that depsite all the high-priced projects on the market, the majority of buildings are aimed at local buyers.987313

At first glance, Panama's real estate boom seems to have left behind Panamanians.

Prices for units in areas such as Punta Paitilla and Costa del Este are out of reach for many locals, and many of them are aimed at the foreign market.

But mortgage data from local banks show that most of the financing in the housing market isn't for luxury condos, but rather housing for the middle and lower classes.

Banks reported that 85 percent of customers who received a mortgage in 2007 were buying property that cost less than $50,000.

"The real estate boom is not concentrated on luxury apartments, but on housing," said Mario de Diego, executive vice president of the Asociación Bancaria de Panamá (ABP).

Only about 5 percent of the mortgages issued by Panama's banks were for $100,000 or more.

These figures contradict the common perception that only foreigners are buying into the local real estate market.

"Many people think that 80 percent of developers are focusing on the construction of houses for foreigners with very high prices. But that is a myth," said Mitsila Espino, director of the Consejo Nacional de Promotores de Vivienda (Convivienda).

Out of every 100 houses that developers affiliated with the Consejo Nacional sold in 2007, 75 cost less than $62,500. That is the cut off for buyers to receive a preferential interest rate from banks.

Convivienda members sold 6,372 units last year, an increase of 10 percent from 2006. The value of the properties sold, however, rose 19 percent. Convivienda members represent 60 percent of the market.

But home buyers may be in for sticker shock this year as prices are expected to go up. Convivienda estimates sales to increase 15 percent and the average price of a new residence to rise 10 percent to $85,000.