The Colombian government is facing a dilemma that will shape the political pulse in the coming months on the economic front: How to reconcile an ambitious increase in the minimum wage with the stability of prices for essential goods, especially housing, a sector that has already been mired in a significant crisis for several years.
At the end of last December, President Gustavo Petro signed a decree setting the minimum wage for 2026 at an increase of nearly 23%, bringing total basic income — including the transportation allowance — to close to 2 million pesos per month (approximately US$540) for more than 2.5 million workers in the country who receive it.
This move, the largest of its kind in decades, aims to raise the purchasing power of the working class and reduce inequality, but it has also set off alarm bells in real estate sectors and among the public over the impact it could have on the prices of Social Interest Housing (VIS) and other segments of the market.
During the first weeks of the new year, and with the specter of a resurgence in inflation — with the housing sector playing a significant role in this increase — the executive branch and its technical team have been rolling out a package of regulatory measures whose explicit purpose is to soften inflationary effects and, in particular, to ensure that the wage hike does not automatically translate into higher housing prices, a concern that has already sparked debate and reactions across different social and economic strata.
Colombia aims to rein in housing prices by boosting the minimum wage
One of the most important changes the government has proposed — and that is being discussed in a draft decree — is a modification to the price-setting mechanism for Social Interest Housing (VIS). Traditionally, the maximum value of these homes has been expressed in multiples of the minimum wage, meaning that when the legal wage rises, the legal price ceiling for VIS also increases automatically.
If this linkage is not corrected, many analysts fear that construction and marketing costs for these homes will end up reflecting the wage increase, making properties more expensive precisely for those they are intended to benefit.
The proposal under discussion points to prices being agreed upon and quoted directly in Colombian pesos, rather than in minimum wages, from the stage prior to contract signing through the final stages of the transaction. This simple technical revision, according to official sources at the Ministry of Housing, seeks to provide greater predictability and certainty for buyers, while preserving the social character of VIS.
In this regard, the Ministry of Housing justified the measure by stating that it seeks to “protect buyers” following the recent minimum wage increase. By delinking prices from the minimum wage, the aim is to prevent the logic of automatic indexation from driving a spiral in values that ultimately pushes lower-income households out of the formal market.
Another piece of the government’s strategy consists of promoting mechanisms that strengthen protections for families seeking to purchase a home. The draft decree emphasizes compliance with existing legal caps — such as those established by Law 388 of 1997 — but also incorporates clearer criteria to prevent ambiguous interpretations that could be exploited by real estate agents or financial players to introduce unilateral price adjustments.
The intention is to ensure that future buyers are not exposed to unexpected increases or contractual clauses that take advantage of regulatory loopholes.
This approach, according to official sources, also includes improvements in contract oversight and the creation of early market warning systems to detect unjustified price increases.
While the finer details of these mechanisms are still under discussion, the underlying logic is that greater transparency and market oversight can moderate speculative inflationary trends, especially in sensitive sectors such as real estate and durable goods.
Coordination with other sectors to curb generalized inflation
Beyond social housing, the government has indicated that concern over the impact of the wage increase extends to other areas of the economy. Unlike rigid price-control policies, which have been debated in various countries, Colombian authorities have insisted that the goal is not to impose arbitrary price caps, but rather to create conditions that deter speculative practices and strengthen competition and supply.
In this context, officials have spoken of improving logistical efficiency, reducing bottlenecks in supply chains, and opening channels of dialogue with construction guilds and consumer associations to identify joint solutions.
In the coming weeks, the government expects that these regulatory measures, combined with closer monitoring of the housing market and basic goods, will help ensure that the minimum wage increase becomes an effective tool for redistribution without turning into a trigger for price pressures.
At the same time, economic authorities remain attentive to overall inflation figures, which will influence fiscal and monetary policy decisions to balance growth, employment, and price stability throughout 2026.