Mexican Housing Sector Thrives

Moody’s expects Mexico’s housing sector to continue growing, on the back of stable home prices, a growing younger population and an ample supply of mortgage credit for low-income housing. Of the 7 homebuilders Moody’s rates, 6 are on stable outlook, and the majority are among the biggest in Mexico, it says in a report. They are able to thrive thanks to economies of scale, access to capital and sophisticated operating platforms. “Our outlooks on the homebuilders take into consideration their increased growth in 2010, while we expect them to maintain leverage, particularly short-term debt, at modest levels,” Moody’s says. The agency adds that operators have been managed to generate free cashflow and with many increasing land inventories, they are expected to grow. However, it notes that Mexico’s multi-purpose finance companies, Sofomes, have faced rising delinquencies in their loan portfolios, liquidity shortfalls and limited access to capital. Of the 3 rated by Moody’s, 2 are on negative outlook. The sector had previously relied on the securitization market to provide loans, but as this has slowed down it has relied more heavily on the Mexican government’s SHF. However, as this had led to more regulation, it adds to their difficulties and threatens the viability of the structure of Sofomes, says Moody’s.