Is Panama's housing market recovering?

What went wrong with Panama’s housing market in 2025?

Panama’s housing market had a genuinely bad 2025, but much of the collapse came from a financing shock rather than buyers suddenly losing interest in property.

New-home sales fell from 4,737 units in 2024 to 2,866 in 2025, according to data from 4S Real Estate reported by La Prensa. That was a 39.5% drop, or 1,871 fewer homes sold in a single year. Convivienda, the developers’ association, counted a 34% fall to 4,020 homes on its own, different sample.

The timing matters. Panama had just recorded its highest new-home sales level in years in 2024, even above the pre-pandemic period. Then the $10,000 Fondo Solidario housing subsidy disappeared, and the switch to a new preferential-interest mortgage system left buyers, banks and developers guessing for months.

Some households simply couldn’t close under the new conditions, while others waited for the rules to settle. That’s how sales could fall so hard while the economy kept growing.

The 2025 slump was real, but it overstated how much underlying housing demand had weakened. It also makes any 2026 growth rate look bigger than it is, because the comparison base is so low.

Are Panama home sales actually bouncing back now?

New-build sales are. The wider market isn’t yet.

In the first quarter of 2026, 4S Real Estate recorded 1,292 new-home sales. That works out to about 431 sales a month, compared with an average of only 239 a month during 2025, or about 80% more.

Panama City data points the same way. Panama Equity reported 620 sales of new or under-construction properties in May 2026, worth about $196.7 million, 27.8% more in value than a year earlier. Fewer units were sold than in May 2025, though: buyers spent more money on fewer, pricier homes.

Now the less flattering number. ACOBIR and INDESA, which look at a wider base than new projects, put residential sales value at $695 million in the first half of 2026, down 13% from a year earlier. Sales of homes up to $120,000 fell 28.3%, and those above $120,000 fell 6.2%.

So don’t multiply one strong quarter by four. Convivienda forecasts 5,530 new-home sales for 2026 on its own sample, but that’s a forecast. What we can say is that new-build buyers came back, while the market as a whole has stopped falling fast rather than started growing.

Sales measure	2024	2025	Latest 2026 evidence	What we see
New homes sold (4S Real Estate)	4,737	2,866	1,292 in Q1	Strong rebound
Average monthly sales (4S Real Estate)	395	239	431 in Q1	About 80% above 2025
Panama City new-build sales value (Panama Equity)	—	—	$196.7M in May	+27.8% YoY
May new/under-construction sales (Panama Equity)	—	—	620 units	Fewer units, higher value
Residential sales value (ACOBIR/INDESA)	—	—	$695M in H1	-13% YoY, wider market still soft

Is Panama City still oversupplied with condos?

Much less than before. Panama City’s old condo oversupply has been shrinking for years, and unsold developer stock is still falling.

Galería Inmobiliaria counted a pipeline of 16,311 units in early 2026, covering presales, projects under construction and recently completed buildings. Panama Equity called it the lowest level it had recorded in nine years.

A separate measure, units actually available for sale, stood at 15,499 in May 2026, about 11% below a year earlier. That’s not a drop from 16,311: the two figures count different things. Completed units ready for immediate delivery were down about 8%.

Resale listings tightened across several neighborhoods, not one hotspot. Between the first quarter of 2025 and the first quarter of 2026, broker-tracked listings fell roughly 30% on Avenida Balboa, 31% in Punta Pacífica, 38% in San Francisco, 40% in Costa del Este, 43% in El Cangrejo, 52% in Santa María and 59% in Casco Viejo.

Seven districts moving the same way is hard to dismiss. Panama City still has plenty of property for sale, but the huge overhang that defined the market for years has mostly been absorbed.

Panama City area	Resale inventory change (Q1 2025 to Q1 2026)	Resale price/m² (early 2026)	New-build price/m² (early 2026)	Current picture
Avenida Balboa	-29.5%	$2,400	$3,300	Tightening
Costa del Este	-40.2%	$2,500	$3,800	Tight
El Cangrejo	-43.2%	$1,770	$2,800	Tight
Punta Pacífica	-31.0%	$2,200	$4,300	Tightening
San Francisco	-38.0%	$1,900	$3,500	Tight
Santa María	-52.4%	$2,900	$3,800	Very tight
Casco Viejo	-59.4%	$3,800	$4,300	Very tight

Are Panama home prices rising again?

New-build prices are. Average closed resale prices aren’t.

Panama Equity’s first-quarter 2026 review found new-build prices up roughly 15% over twelve months. That’s a big move, especially after years when Panama City developers had to fight for buyers.

What buyers actually paid for existing apartments tells another story. ACOBIR’s MLS put the average closed apartment price in Panama City at $1,726 per m² in the first half of 2026, down 1.7% from $1,756 a year earlier. With inflation at 2.8% over the 12 months to September 2026, that’s a loss of about 4.4% in real terms.

The gap between new and existing apartments is the real story. Panama Equity’s early-2026 estimates put a new unit in Punta Pacífica at about $4,300 per m² versus roughly $2,200 for resale stock, and San Francisco at about $3,500 versus $1,900. Those premiums are about 95% and 84%. Costa del Este had a smaller gap, about $3,800 versus $2,500, or 52%.

So no, the average Panama City apartment didn’t gain 15%. Older buildings with high condo fees, dated facilities or weak management still struggle to raise prices, and MLS apartments sold on average 6% below their last asking price after 224 days in the first half of 2026.

Developers can charge heavily for newness, amenities and installment plans. Many older apartments stay available at much lower prices, and that’s where buyers have room to negotiate.

Which homes are selling fastest in Panama right now?

Panama City homes between roughly $180,000 and $400,000, with the $300,000-$400,000 new-build bracket the hottest of all.

Early in 2026, Galería Inmobiliaria data showed the $180,000-$300,000 segment running at roughly 62 sales a month, around 30% above a year earlier.

By June, the bracket just above was moving even faster. Panama Equity counted 104 sales of new and under-construction condos priced between $300,000 and $400,000, against 42 in June 2025, an increase of about 148%.

The $300,000 level matters because of Panama’s Qualified Investor residency. Since Decree 17 took effect on September 16, 2026, that $300,000 route only applies to the first sale of a new home; a resale has to reach $500,000. So the residency effect now lands almost entirely on new condos.

The national split says the same thing: in the first half of 2026, sales value fell only 6.2% above $120,000 but 28.3% below it. Panama’s sweet spot is the upper-middle market, not cheap housing and not multimillion-dollar condos, where the buyer pool is much smaller.

Are foreign buyers propping up Panama’s housing recovery?

At the top end, yes. Foreign buyers do a lot of the heavy lifting around and above $300,000.

INDESA estimates that foreigners made 57% of residential purchases above $120,000 in the first quarter of 2026. Foreign purchases totaled $205 million, up 17%, and US buyers alone spent $33.6 million, up 53%. That 57% is not the share of all homes sold in Panama.

The residency program shows the same pull. Panama’s Ministry of Commerce and Industry (MICI) issued 268 Qualified Investor certificates between July 2025 and June 2026, backed by $113.6 million of investment, up from 193 a year earlier. In its August 2025 release, MICI said 83% of certificates went to real estate rather than securities or bank deposits.

The demand came from many countries. In MICI’s August 2025 breakdown, Colombians held 119 certificates, followed by Americans with 74, Peruvians with 52, Germans with 50 and Canadians with 47.

We shouldn’t pin every $300,000-$400,000 sale on residency buyers, but the overlap is too large to ignore. Foreign capital gives Panama City a buyer base that doesn’t depend on local salaries or Panamanian mortgages, which makes the upper half of the market much sturdier than the lower half.

Do the new residency rules push buyers toward new condos?

Yes. Since September 16, 2026, the cheapest residency-by-property route only works with a new home bought from the developer.

Under Decree 17 of 2026, the Qualified Investor program accepts real estate from $300,000 for the first sale of a new home and from $500,000 for a resale. You get permanent residency, but you have to keep the investment for five years. The fees are $5,000 plus a $5,000 repatriation deposit.

You can’t finance your way to the threshold. Any mortgage on the property is deducted, and the value that counts is the lower of the price paid and market value. A $320,000 condo with a $100,000 loan counts as $220,000, which doesn’t qualify.

If you signed a contract before September 16, 2026, there’s a transition until March 16, 2027. Other routes haven’t changed: Friendly Nations, for eligible nationalities, accepts a $200,000 property and allows financing; Pensionado needs a lifelong pension of $1,000 a month, or $750 if you own a property worth over $100,000 in your name.

What to check before buying for residency: that the unit is a genuine first sale with its occupancy permit timeline in order, that the price is at least $300,000 net of any debt, and that you’re not paying a new-build premium you can’t get back. A $350,000 new unit won’t qualify its next buyer for the $300,000 route, because by then it’s a resale. That limits who can buy it from you later.

Is Panama’s housing recovery only happening in expensive condos?

Mostly, yes. The middle of the market is improving, but homes under $120,000 are still losing sales.

The $180,000-$300,000 category was already recording roughly 30% higher monthly sales early in 2026, which puts part of the growth below the Qualified Investor threshold.

Construction data shows developers planning beyond luxury condos too. During the first five months of 2026, residential units in approved projects nationwide rose from 2,146 to 3,694, a 72% increase.

Panama district alone went from 1,473 approved units to 2,332, a gain of 859. The national gain was 1,548, so a good part of the new pipeline is outside the capital.

The bottom of the market is where it breaks down. ACOBIR and INDESA found sales of homes up to $120,000 down 28.3% in the first half of 2026, and loans for homes up to $80,000 fell 35.3% in the first four months. These homes depend on preferential mortgages, and that lending hasn’t recovered.

So the rebound reaches the upper-middle market, but households that need subsidized credit are still waiting.

Are Panama mortgage rates still too high?

Yes. Mortgage rates remain high enough to hold back local buyers, and lending volumes show it.

The Superintendency of Banks kept the residential mortgage reference rate at 6.50% in the first two quarters of 2026; the calculated benchmark behind it was 6.38% for the second quarter. That’s a regulatory benchmark, not what a foreigner pays: Banco General’s 2026 grid shows 8% plus 1% FECI for a second home, with 70% maximum financing over up to 20 years.

For a local buyer, borrowing $150,000 over 30 years at 6.5% costs about $948 a month. At 4%, the same loan would cost about $716, so $232 less every month.

For a foreigner, the numbers are harder. A $300,000 new condo financed at 70% means a $210,000 loan; at about 9% all-in over 20 years, that’s roughly $1,889 a month.

The volumes confirm it. Banks issued about $981 million in new residential mortgages from January to August 2026, down 13% from a year earlier, according to Superintendency of Banks data compiled by Brax.

A cash buyer barely notices any of this. A local household trying to qualify notices it immediately, which is why sales and inventory can look healthy while mortgage affordability stays uncomfortable for much of the population.

Example $150,000 mortgage, 30 years	At 4%	At 6.5%	Difference	Practical effect
Approx. monthly payment	$716	$948	+$232	Harder qualification
Approx. annual payments	$8,593	$11,377	+$2,784	Less disposable income
30-year term	Same	Same	—	Rate drives difference
Effect on cash buyer	Minimal	Minimal	—	Foreign/cash demand less exposed

Has Panama’s new preferential mortgage law actually helped?

It removed the uncertainty, but subsidized lending hasn’t picked up yet.

The current framework took effect on January 1, 2026, and covers qualifying new main residences worth up to $120,000. It uses state subsidies to lower the interest rate for eligible buyers, with help varying by home value, region and household conditions. It isn’t open to a foreigner’s investment apartment.

One important change is permanence. Housing Minister Jaime Jované has stressed that the program no longer carries the recurring expiry date that kept creating uncertainty under older versions. That helps developers deciding whether to launch affordable projects and banks deciding whether to finance them.

The results so far are weak. Preferential mortgages totaled $132 million in January-April 2026, down 34% from $200 million a year earlier, while regular residential mortgages fell 8% to $249 million (Superintendency of Banks data reported by La Prensa).

There’s also an old bill to pay. The government acknowledged roughly $200 million in unpaid obligations to banks from earlier preferential-interest subsidies.

So the rules are set, but the state, banks and developers still need to see the mechanism work for years before cheap lending comes back.

Why is Panama cutting taxes on new homes now?

Because the government wants a faster recovery in affordable and middle-income housing, and the transfer tax was one obstacle it could remove quickly.

The bill passed the National Assembly in third debate with 53 votes in favor, five against and one abstention, and became Law 546. It has been in force since September 1, 2026.

How it works on the first sale of a new home: the first $120,000 of the taxable value is exempt from the 2% transfer tax (ITBI), whatever the price. Between $120,000 and $200,000, the part above $120,000 pays one reduced rate, from 0.5% to 1.8% depending on the home’s price. Above $200,000, the part over $120,000 pays the normal 2%.

So the saving is up to $2,400, even on a $400,000 condo. The law doesn’t require you to live in the home. The sale has to be formalized within 24 months of the occupancy permit (30 months during the transition).

One catch: the ITBI is normally paid by the seller, here the developer. Ask how the saving shows up in your price or closing statement. Your own closing costs as a cash buyer (lawyer, notary, Public Registry) stay at about 1.5% to 3% of the price.

It won’t turn an unaffordable mortgage into an affordable one. But combined with preferential rates, it removes one more obstacle at the price points where Panama still needs more buyers.

Is home construction really coming back in Panama?

Yes, from a low base.

CAPAC reported that the investment value of construction permits nationwide rose 36.3% in the first quarter of 2026, to $301.1 million from $220.9 million (INEC data). But that was still 44.1% below the first quarter of 2023, which CAPAC keeps stressing.

INEC data for the first four months showed permit value up 43.5% to about $417 million, with permitted floor area up roughly 31.7%. For the first half, ACOBIR and INDESA put residential permit value up 14.1%.

The residential-unit figures are the easiest to read. Approved homes rose from 2,146 in the first five months of 2025 to 3,694 in the same period of 2026, about 1,550 more homes in the pipeline.

Builders are coming back, but they’re rebuilding after two weak years, not racing ahead.

Construction measure	Earlier level	Latest level	Change	What it tells us
Q1 permit investment (CAPAC/INEC)	$220.9M (Q1 2025)	$301.1M (Q1 2026)	+36.3%	Strong rebound
Q1 permit investment vs 2023	Q1 2023	Q1 2026	-44.1%	Still well below 2023
Jan-Apr permit value (INEC)	~$291M	~$417M	+43.5%	More projects moving
Jan-Apr permitted area (INEC)	—	—	+31.7%	Physical volume rising
Residential permit value, H1 (ACOBIR/INDESA)	H1 2025	H1 2026	+14.1%	Slower over six months
Residential units, first 5 months	2,146	3,694	+72%	Pipeline rebuilding

Could Panama start overbuilding homes again?

Eventually, yes, but Panama is still closer to rebuilding supply than to another glut.

Developers have good reasons to launch. New-build prices have climbed, unsold stock is down 11% to 15,499 units, new-build sales recovered and buyers accept big premiums for modern buildings in several Panama City neighborhoods.

In Punta Pacífica, a new unit sells for about 95% more per m² than a resale. That’s a powerful incentive to build.

Construction doesn’t look excessive yet. Approved units are rising fast, but projects take years to deliver, permit investment is still 44.1% below 2023, and Panama City spent most of the past decade absorbing an earlier supply wave.

The risk gets serious if launches keep accelerating for several years while mortgage lending stays weak and foreign buying slows. For now, developers are responding to a tighter market, not flooding it.

Is Panama’s economy strong enough to keep housing demand alive?

Yes. The economy is growing fast enough to support housing demand, although the job market explains why the recovery feels weak for many households.

INEC measured growth of 4.4% in 2025, 4.8% year on year in the first quarter of 2026 and 5.5% for the first half, driven by the Canal and trade. The World Bank expects 4.2% for the full year 2026.

Construction, trade, hotels and restaurants, real-estate activities and transport all contributed to first-quarter growth. That’s a healthy backdrop for property.

Inflation is back as well: consumer prices rose 2.8% over the 12 months to September 2026 (INEC), after close to zero in 2025. That pushes rents up, and it means a flat sale price is a small real loss.

The awkward number is unemployment: 8.5% in INEC’s August 2026 survey, down from 10.4% in 2025, with 45.8% of jobs informal. A country can grow 5% and still leave many households unable to qualify for a mortgage. That’s why the recovery looks much stronger in investment property and higher-priced sales than in mass-market housing.

What could still derail Panama’s housing recovery?

Expensive credit is the clearest threat. Prices for new homes are rising before mortgage affordability has improved, and new mortgages are still down 13% for the year to August.

New-build pricing is the second risk. Paying $4,300 per m² where older apartments sell near $2,200 only works if the new building delivers better rents, lower maintenance risk or stronger resale demand. With closed prices already slipping 1.7%, buyers are starting to push back.

Developers also have to resist Panama City’s old habit of adding supply too fast once demand improves. The approved pipeline is already up 72%.

Foreign demand can move quickly. The September 2026 residency change helps new condos but cuts residency demand for resales below $500,000. On the other hand, the EU took Panama off its list of non-cooperative tax jurisdictions (Annex I) on October 9, 2026; it stays on Annex II, under monitoring, and isn’t on the FATF grey list.

Two more things to watch. A magnitude 7.5-7.7 earthquake (agencies differed) hit near Tonosí, on the Azuero peninsula, on October 9, 2026, damaging buildings and roads; Panama is outside the main hurricane belt but has moderate seismic risk. And with unemployment at 8.5% and almost half of jobs informal, local households can’t absorb ever more expensive housing.

None of these looks strong enough to reverse the new-build recovery. They do make a runaway boom unlikely.

Should you buy in Panama now or wait for prices to rise?

If you buy resale, now is a decent time to negotiate. If you buy new, don’t pay the brochure price.

The numbers favor buyers on existing apartments: MLS apartments sold 6% below their last asking price on average in the first half of 2026, after 224 days, and closed prices slipped 1.7%. Treat that 6% as a starting point, not a target, especially in older buildings.

New-build sellers have more pricing power, but you still have levers: a cash discount, parking or a storage room included, the developer paying your closing costs, and the Law 546 saving of up to $2,400 showing up in your price. Check closed prices for the building or district (ACOBIR MLS, registry comps from a broker), not portal asking prices.

Before you sign, get the building’s “paz y salvo” (proof that condo fees are paid; unpaid fees follow the unit) and its PH rules. Some buildings ban short stays, and in the district of Panamá, renting for less than 45 days without a tourist-accommodation authorization can bring fines of $5,000 to $50,000. Bills 301 and 713 on short stays had still not been voted on October 28, 2026.

After the October earthquake, ask for the building’s structural documents and any post-quake inspection, and price in insurance. Waiting has a cost too: unsold new-build stock is shrinking, and the best-located resale listings are down 30% to 59% in a year.

Where does Panama’s recovery stand in late 2026?

Halfway. New-build sales, supply and construction have turned. Closed prices, sales value and mortgages haven’t.

The good side: after a 39.5% drop in 2025, 1,292 new homes sold in the first quarter of 2026, Panama City recorded $196.7 million of new-construction sales in May (+27.8%), unsold stock fell 11% and approved residential units rose 72%.

The other side: residential sales value fell 13% in the first half, closed apartment prices in Panama City slipped 1.7%, sales below $120,000 fell 28.3% and new mortgages were still down 13% through August.

Panama City is ahead of the rest of the country, the $180,000-$400,000 new-build market is doing best, and foreign buyers (57% of purchases above $120,000) give the top end an advantage that affordable housing doesn’t have.

What to watch next: ACOBIR’s second-half MLS report on closed prices, the monthly Superintendency of Banks mortgage figures, and whether Law 546 lifts sales of new homes below $200,000. If mortgages turn up, the recovery will reach the rest of the market.