The start-up of mortgage loans have opened the floodgates to a housing demand. When coupled with a reduction in the numbers of available real estate, these changes have had a notable impact on prices. According to the latest survey by the Universidad Argentina de la Empresa (UADE) where Clarín had exclusive access, new apartments in Buenos Aires City have appreciated at around 10% in average in the last year, while prices of used apartments have climbed around 16.5%.
As the UADE noted in its last report, “today the concern is the performance that the [mortgage loan offer] will have in the short and medium term since the price increase would be reflected in used apartments as an insufficient offer and, in the new ones, the incidence of higher costs.”
Apartments around the city are annually monitored and compared with the previous year’s prices by the UADE. According to one monitored group, units located in the neighborhoods of Recoleta, Palermo, Belgrano, and Nuñez that featured both new and used apartments reported the highest prices. In those neighborhoods, prices of a “brand new” unit hovered between US $3897 (Recoleta) and US $3244 (Nuñez) per square meter.
According to the UADE calculations, in comparing numbers between August 2016 vs. August 2017, prices have sufficiently increased. For example, the simple average offer price per square meter in the surveyed neighborhoods could hit US $2972 (a 9.9% increase, compared to numbers from 2016) for a new apartment. While in comparison, the offer price per square meter could reach about US $2519 for a used apartment (12.3% lower, in the same period comparison).
When it comes to specific neighborhoods, the value of new apartments didn’t get any more attainable. The prices of units in Belgrano, Palermo, Núnez and Recoleta grew by 10.1%, 9.4%, 7.2%, and 5.9% respectively, when comparing prices from August 2016 to August 2017.
The UADE’s calculations also recorded the average prices of apartments on the rise. When analyzing prices of the same time periods, the results came in at increased numbers for Nuñez (16.5%), Belgrano (16.4%), Recoleta (12.9%) and Palermo (12.8%).
Finally within the realm of Buenos Aires real estate it appears consumers are starting to reverse the period of 2002-2015, which was characterized by a growth of tenants to the detriment of the owners. In 2017, there are now more people who want to buy apartments – largely as a result of the mortgage loans – but they just seem to be getting more expensive by the month. And it doesn’t seem like the trend will stop any time soon, as the loans “registering an exponential growth with expectations of continuity.”
As explained by the UADE, “The loans are concentrating heavily on this line of financing since the applicant with the same income has access to a greater amount and its destination is primarily the purchase of a home (first or replacement), although one could opt for replacement or construction. The incentive for taking a loan lies both in the terms (between 25 and 30 years) and in the interest rates. This offer of loans is for people between 25 and 40 years old, with an average amount of $ 1,400,000, being the cap approximately at $ 3,000,000.”
Credit expansion through this sector is observed through the increase in purchase-sale operations and the amounts involved in them. As noted by Clarín, the number of book-entry events (6,019) recorded a rise of approximately 42.3% from this past August. These numbers differ greatly from August of 2016 which yielded amounts of 71% in dollars and 92.7% increase in pesos. The difference in numbers is due to the exchange rates following information provided by the Colegio de Escribanos de la Ciudad de Buenos Aires.
For more information on housing prices, refer to the most recent published study by the UADE that covers results from last June.