The Home Building Environment
Housing is a government priority—
subsidies available for homebuyers
In September 1998, Canada and Chile signed an agreement to exchange research and housing related technology.
The Chilean government strongly encourages home ownership. Various tax incentives and savings programs encourage middle-income families to invest in housing through the private sector. Government financial assistance is available for those unable to arrange for private financing for housing. Subsidies of up to 50% are available to qualified applicants. Housing programs sponsored by non-profit groups also qualify for subsidies up to 50%. A large percentage of Chilean families are eligible for housing assistance in one form or another. These programs, coupled with the desire of Chilean families to obtain housing to pass to future generations, have created exceptionally high demand.
Much like in North America, the mortgage lending system is well established and accepted by all parties involved in the Chilean housing industry. Banks will finance up to 100% of housing project construction costs for developers and builders. In 1996, a leasing purchase option emerged for the buyer where the down payment is mortgaged and the buyer makes monthly mortgage payments against the down payment in addition to monthly rents. When the mortgage period is completed, the accumulated rental payments are treated as purchase payments. More recently, home mortgages for 100% of a home purchase (ie: zero-down) have become common.
The home-building environment
Traditional building materials for residential construction are masonry, concrete and wood. Government subsidies are generally not available for homes with a life expectancy of less than 20 years. Also, subsidies decrease considerably as the age of a wood house increases. This adversely affects the resale value of homes, which is generally taken into consideration by purchasing families. Hence masonry is heavily favored over wood. But Chile is earthquake prone. New buildings must be able to withstand major earthquakes without collapse. Codes are similar to those of North America cities like many in California as well as Vancouver, Canada . Rockport's Technology satisfies these requirements.
A high-demand market
There is a severe housing shortage in Chile due to population growth, lack of skilled workers and a recent severe termite infestation. Chile has an actual deficit of more than 750,000 housing units. Tax incentives for new homebuyers are expected to further boost demand while social housing programs in Chile are targeting construction of 90,000 dwellings a year over the next 5 to 10 years.
Foreign builders sought
Local contractors build wood-frame housing, but utilize labor-intensive methods and produce inferior structures. Also, due to earthquakes and carbon dioxide emissions, cinder or adobe block construction is an inefficient and unsafe method of housing. Chile actively seeks foreign companies - especially from Canada—that can help them meet their housing construction goals. Rockport has been enthusiastically welcomed in Chile. Thanks to our use of rapid, high quality construction that is competitively priced, Rockport has the potential to become a dominant company in Chile’s affordable housing sector.
Finally, Canadians, Canadian companies, and Canadian products are well regarded in Chile. Canadian products tend to be associated with high quality and good value in the minds of Chilean people.