An Argentine Equilibrium
Despite the global economic situation and pessimistic outlook, the Buenos Aires real estate market remains unchanged, with the variables maintaining a steady course.
The Buenos Aires real estate market has rules that it tends to stick to: if there is no credit or mortgage schemes available to the middle classes then the rental market will remain stable. There is steady growth as investors are still purchasing properties to rent and there are always people to occupy them. Sometimes investors and tenants mutually benefit from each other; however, there are occasions when some lose out.
House prices have remained stable in comparison with the start of the year and tenants renewing their rental contracts will find that this year’s prices are in line with inflation and there has been little change.
In Argentina, there is deficit of homes that are available to homeowners. Investors dominate the market and ensure there is a demand for renting. This Argentine equilibrium feeds into the vicious cycle that keeps the middle class renting without the possibility of saving money for a future home as all their monthly income goes on the high cost of living.
One benefit to the Buenos Aires real estate market is that the properties that are being constructed are of a high standard. The fact that they will be rented out as homes rather than bought means that developers are building high quality, luxury homes. One and two bedroom apartments will always be in demand in Buenos Aires, which in turn ensures that the market is constant and stable. The figures show that there is huge demand for rental properties and that there are plenty available: there has been a 47% increase in rental properties and it is estimated that there are 10,000 vacant rental properties on the Buenos Aires real estate market alone.
Investors buying to rent tend to buy one or two bedroom apartments in neighbourhoods that are safe, well-lit and well-known. The favourites include; Palermo, Barrio Norte, Recoleta and zones near to universities that will be rented out to the thousands of students who come to live and study in Buenos Aires.
The market remains stable and the only thing that could change this fragile stability is if mortgages and credit systems become more accessible and flexible to the middle class. With a mortgage a family would be able to stop renting and buy a home. However, the banks continue to limit accessibility allowing landlords and developers to benefit from the stability of the market.
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