During the year to end-Q2 2013, the house price index for the three major Colombian cities soared by 11.77% (9.51% inflation-adjusted), according to the Banco de la Republica Colombia. In Q2 2013, house prices rose by 2.68% (1.85% inflation-adjusted) from the previous quarter.
Colombia’s property market has seen spectacular house price rises in the past seven years, despite the global financial and economic meltdown.
- In 2006, house prices soared by 16.45% (11.62% inflation-adjusted) from a year earlier.
- In 2007, house prices skyrocketed by 17.98% (11.91% inflation-adjusted) from the previous year.
- In 2008, residential property prices rose 12.4% (4.28% inflation-adjusted) y-o-y.
- In 2009, house prices rose 11.97% (9.38% inflation-adjusted) from a year earlier.
- In 2010, house prices increased moderately by 4.78% (2.03% inflation-adjusted) y-o-y.
- In 2011, residential property prices rose by 5.53% (1.56% inflation-adjusted) from a year earlier.
- In 2012, house prices surged again by 16.33% (13.21% inflation-adjusted) from the previous year.
During the second quarter of 2013, the economy grew by 4.2% from the same period last year, up from the growth rate of 2.8% last quarter, according to DANE. Colombia’s economy is expected to grow by 3.7% in 2013, after registering real GDP growth rates of 4% in 2012, 6.6% in 2011, and 4% in 2010, according to the International Monetary Fund (IMF).
"It is very good news, because this translates into more employment, into more funds for social investment, into more development ... So I'm celebrating that the economy has begun to recover after the drop in the first quarter," said President Juan Manuel Santos.
The country’s central bank had kept the benchmark rate at 3.25% in August 2013, after 200 basis points were shaved of the key rate since July last year, in a bid to boost the economy further.
Analysis of Colombia Residential Property Market »
Across the Bogota districts that we cover, gross rental yields range from 6.5% to 9.6%, with most yields being around 7% to 8%.
Capital Gains: The capital gains tax for nonresidents is at a flat rate of 33%.
Inheritance: Inheritance is taxed at 33% for non-residents.
Residents: Residents are taxed on their worldwide income at progressive rates, from 19% to 33%.
Rent Control: The most pro-tenant aspect of the law is that monthly rents cannot exceed 1% of the property value, giving the landlord a 12% maximum yield. But in reality, if the tenant does not complain, the landlord can get more.
Tenant Security: The rules for renewal and termination tend to favor landlords. If the tenant owes rent, the landlord can seize his properties. And even if eviction proceedings are long, the tenant is required to pay the rent for the duration of the proceeding.
However, Colombia is also known for its decades-long violent domestic conflict, the widespread drug cartels and the blatant violations of human rights.
From 2003 to 2008, the country managed to register robust economic growth of an average of 5.2% per year. The economy slowed sharply in 2009, with a real GDP growth rate of 1.7% before returning to healthy growth of 4% in 2010 and 6.6% in 2011. In 2012, real GDP growth stood at 4%.
During the second quarter of 2013, the economy grew by 4.2% from the same period last year, up from the growth rate of 2.8% last quarter, fuelled by expansions in agriculture, mining and construction, according to DANE. Colombia’s economy is expected to grow by 3.7% in 2013 and 4.2% in 2014, according to the International Monetary Fund (IMF).
In September 2013, the national jobless rate fell to 9%, down from 9.9% in the same period last year. Likewise, the country’s urban jobless rate also dropped to 9.9% in September 2013 from 10.7% in the previous year.
In November 2013, the country’s nationwide inflation rate dropped to 1.76%, the lowest level in six decades, thanks to falling food and housing costs. This is below the central bank’s target range of 2% to 4%.
The country’s central bank, Banco de la Republica Colombia, had kept the benchmark rate at 3.25% in August 2013, after 200 basis points were shaved of the key rate since July last year, in a bid to boost the economy further.
In August 2010 Juan Manuel Santos succeeded former President Álvaro Uribe. Santos, previously minister of defense, defeated his close competitor Antanas Mockus, after a second electoral round in June 2010. High unemployment and mending Colombia’s relations with Venezuela and Ecuador are main concerns for Santos’ government.