The real estate market faces a significant period fundamentals that support price declines, although the scope that this dynamic will have in the coming months has not yet been determined. One of these foundations, and principals, are demand slumped which is evidenced by the contraction in the number of writings. In that case, revocation of the number of operations is supported with mortgage deepen market trends.
It must be remembered between January and November real estate transactions in the City of Buenos Aires decreased by 8.4% compared to eleven of 2017, according to Porteño Notary Public School. But this contraction it accelerates in the past few months. As of November 2018, the decline is 46% compared to November 2017.
The other is that Excessive rising values are measured in pesos, above inflation, potential buyer income and own sectoral costs, when it is clear that high exchange rates come to stay, even with the dollar down 9% from $ 41.85 at the end of September, to $ 38 January 2018
With a wholesale dollars which increased by 102% throughout 2018 and increases in quotes measured in foreign currencies, "Real estate inflation "approaching 120% last year, when the overall index is close to 48 percent.
Both in monthly and year-to-year measurements, the weight of a larger increase is borne by Material (1.4% in December and 69.8% in 2018), followed by general expenditure (0.6% and 45.1%, respectively).
The item is in both cases below the general level is Labor, in harmony with a evolution of wages below inflation: it did not change in December and throughout the year recorded an increase 33.5 percent.
A third bearish foundation is a decline operations supported by mortgages. Credit is the engine of expansion of the real estate market in 2016 and 2017, but escalation of inflation and the dollar which doubled in value last year they returned to Suppress evolution Housing loans.
According to the Public Notary Association, the act with credit in the City of Buenos Aires they added between January and November 12,718 innings, with one low 10% compared to 2017.
A fourth factor, very positive, is what is expected Expansion of new supply units. Survey about Professional Board of Architecture and Urbanism (CPAU) porteño published by Real Estate Report It detects a significant increase in permits for new works, some motivated to prevent the entry into force New Urban Code and a new system of acquiring land capital for the city of Buenos Aires.
CPAU detected in 2018 an increase of 21.2% in the presentation plan for new works, which are approaching 5,000 projects, the highest number in a decade. This increase is verified in all job categories: women, medium and large surfaces. Even in an area of more than 5,000 square meters, 152 projects have been registered, almost double in 2017 (84) and 2016 (82).
Sebastián Sosa, president RE / MAX Argentina and Uruguaand, he explained that "that market pregnant with what happened in 2019 with prices. There is a gap between buyer expectations and seller expectations. From devaluation, the seller is waiting for his property to be reflected in a the price best suits the situation, and those who buy want to get more competitive prices"
"This allows the second part of the year to produce open during negotiations and that the parties more flexible when completing the operation. While price does not drop 35% as expected by the buyer, they close with margin between 10% and 15%", summarized Sebastián Sosa.
José Rozados, director of Real Estate Reports, explained to Infobae that other indicators can act as "predictors" of the market, that is rent rentability. "That profitability in dollars, the product of the devaluation and even with the increase in the rent of the peso, This is the lowest in history: 2.8% per year, from 3.5% a year ago. "This variation may be due to two reasons: whether the rental price is cheap or the property is expensive, and given the vulnerability of the family budget due to the loss of purchasing power from wages, chances are the second: Market value has not been adjusted to the current economic scenario.
"Anyone who needs to sell must be very flexible and pay attention to the counter-offer that will be carried out, "Rozados said.
According to the survey from Mercado Libre Property, in 2018 it is dollar price increases for sale slowed to 5%, from 11% in 2017. But, in this case, it must be clarified that this is the value sought by seller (publication), which may be lower when making transactions and negotiating with buyers. And even lower at the time of writing, because the administrative seat does not always reflect the real value of the agreement between the parties.
Architect Graze indicates that the consultant carried out in 2018 "a single measurement on November, compared to the previous quarter, which reflects the average publication price They have fallen by 1.4% the average, and the most prominent fall, according to the environment and unit typology, does not exceed 5% ".
However, Rozados estimated that "that last year there was a decline in prices in dollars ranging from 7 to 20 percent interannual, depending on location. I do not give that contributions can be maintained at this level compared to replacement costs: for a devaluation that exceeds inflation, construction costs reduced by 30% in dollars. "
"The land is not, the price in dollars remains solid. unit sales value built it can be 15 or 20% lower in dollars, "added the director of the Real Estate Report.
Analysis of the real estate market carried out by economists Juan José Cruces, director of the Center for Financial Research (CIF) from the University of Torcuato Di Tella (UTDT), found that despite Argentina's economic recession, property prices continued to rise.
With the parameters of the City of Buenos Aires, the average price does not fall at the local level heavy devaluation Argentina more than 50% last year. Yes, they do it in Brazil, when analyzing the prices of major cities in neighboring countries, Rio de Janeiro and San Pablo.
In 2018 Brazilian real estate was devalued by 14.3% against the US dollar.
According to the Latin American Real Estate Survey (RIAL) which outlines CIF, between March 2017 and September 2018, that Property prices in Buenos Aires increased 16.8% in hard currency, from 2,659 to $ 3,105 square meters, while in neighboring countries fall.
Values in the residential area Rio de Janeiro produced 29.2% in the same period, from 4,079 to 2,886 dollars, pressured by weak economic activity and a real devaluation. Sign in San Pablo reduced 22.1%, from 2,637 to 2,052 dollars.
Buenos Aires, on March 2017 property prices on display similar to San Pablo and 34.8% cheaper than in Rio de Janeiro, go towards September 2018 becomes more expensive that both cities are neighboring countries.
For Juan José Cruces, the difference in the dynamics of the real estate market lies in the fact that in Brazil prices remain in real and fall in dollars, while in Argentina "order" prices by rising bidders in US currency. "This explains Large real estate recession "locallyhe warned.