Mexico housing demand to slump in 2009, gov't warns

By Noel Randewich

MEXICO CITY, June 18 (Reuters) - Fewer Mexicans are buying homes this year as a deep recession and rising unemployment make buyers wary, Finance Minister Agustin Carstens said on Thursday.

"Demand for housing this year will be 7.1 percent less than in 2008," Carstens told executives at a mortgage industry event.

Hit by falling exports to the United States, Mexico's economy is expected to shrink 5.8 percent this year. That has boosted unemployment and made many Mexicans reluctant to commit to big investments.

Still, leading home construction companies Geo (GEOB.MX) and Homex (HOMEX.MX) have said they expect to increase sales as much as 10 percent this year by focusing on low-income segments that benefit from government subsidies.

They say tough economic times are an opportunity for big players to excel and gain market share from Mexico's thousands of tiny and often inexperienced developers.

Tougher conditions in the home construction industry could lead to consolidation among builders, some experts say.

"Small and less-capitalized home developers, as well as some financial institutions, could disappear or be acquired," Fitch ratings agency said in a recent report.

Geo chief executive Luis Orvananos told Reuters in May his company increased its sales channels to make up for consumers' increased reluctance to buy homes.

Mexico's largest mortgage lender is Infonavit, a government backed agency funded by employer contributions on behalf of employees.

Mexico's banks are also relatively healthy, having focused on traditional lending rather than the subprime niches involved in the U.S. financial crisis.

While demand for housing is declining, financing available to the industry should increase 2.5 percent this year, Carstens said. (Additional reporting by Robert Campbell and Luis Rojas, and Gabriela Lopez in Monterrey; editing by Andre Grenon)