Rising Apartment Prices
As credit remains scarce, and apartment prices continue rising, the dream of owning one’s own home in Buenos Aires becomes more and more difficult. In just the first months of this year, price hikes registered at up to 10% in dollars; in periods of expansion, the prices rise, but they don’t fall during recessions, making for a tough buying situation.
The budding recuperation of Buenos Aires real estate activity, guided by the improvement of some macroeconomic indicators, has motivated a strong acceleration of real estate prices, both in old apartments and in brand new ones, in the first part of this year. Analysts estimate that in those that sell in 2010, the hikes range between 8 and 15 percent, according to the location and condition of the property.
The prices are accelerating at the hand of a notable increase in the number of operations, and in the total number, as well. In terms of the deed transfers, the data from May in the City of Buenos Aires showed an increase of 41% in quantity, and of 91% in the prices of properties.
But the other determining factor was the increase of construction costs in dollars, which, with a stable dollar, translates to selling prices. Other officials and reports are putting the increase at 13 and 14 percent, as well, such as the recent report generated by UADE. The same report estimated that, for that period, the number of properties on the market increased by 7.1%, and that used units increased by 9.3% in price, and new units are now going for 9.7% more than before.
Real estate brokers in Buenos Aires have pegged this number anywhere from 8% to 15%, with the highest increases being in Recoleta and Barrio Norte.
The increases are mostly being attributed to the increase in construction costs. However, each neighborhood is also concluding a large quantity of projects, and that makes the prices rise, as well.
On top of that, the change is simply following the rest of the economy. There was a slowing of the market in 2009 when everything was unstable, and now that the economy is gaining speed, so is the housing market. Unfortunately for buyers today, the slowing in 2009 was just in the number of operations, not in the prices.
So, why is this? Experts believe it is due to the main composition of investors, who have the main hold on property ownership, rather than individual homeowners.
The price is more flexible if there is a need or debt, and that is more infrequent among investors. Also, if there isn’t a better investing option, there is a large, general resistance to lowering the prices. Investors would rather not sell, and wait for a better opportunity, than lose money on a property.
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