Buenos Aires real estate news
The New Year is a time to look back, reflect and analyse the trials and tribulations of the year that’s just passed us by. Real estate brokers and industry experts have been looking over the results from last year with mixed results: some are saying the market is slumping and few remain optimistic. The last quarter of 2011 showed disappointing results with lower than usual deals being closed. It was a combination of different factors and bad luck that caused the market to slow during the last months of 2011. However, the worrying issue is that the dip has continued into the first quarter of 2012.
The main factors that had an impact on the Buenos Aires real estate market were the government’s new control over exchange of dollars, the lack of mortgage schemes from Argentine banks and the fact that few people qualify for mortgages or credit due to the high salary required to be granted one. The issue with mortgages and credit available to buyers is an age-old problem in Argentina. Mortgages are being granted by some banks; however, these have extremely high rates of interest. For example, Banco Ciudad (City Bank, in English) is offering mortgages for properties in urban regeneration schemes in areas in the South of Buenos Aires such as, Parque Patricios, Pompeya, Lugano, Barracas and Constitución. These are not the most desirable areas for many buyers, especially as Banco Ciudad is charging an annual rate of 24% and there are delays in the application process.
Another issue facing the Buenos Aires real estate market is the drought that is being experienced in Argentina. The drought is affecting farmers in the soya, grain and meat farming industry, who are typically the people who invest in the Buenos Aires real estate. It used to be typical for farmers to store their savings in property or invest in a home for their children, but this trend is changing and some are choosing to rent instead until things stabilise. Some Buenos Aires real estate brokers are remaining optimistic citing the time of year as the reason for the dip in January. The month of January is typically a time where most people take their annual leave and Buenos Aires becomes a ghost town as everyone leaves the city for holidays. This would explain the dip at the beginning of 2012, but not the decrease in sales seen at the end of 2011.
Property prices have increased dramatically in the last year too. The overvaluation of real estate in Buenos Aires is due to property owners compensating for the inflation that the economy is experiencing. Sales throughout last year had been strong so hopefully the Buenos Aires real estate market will recover to its previous form once these factors have been resolved.
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