The dream of owning one’s own home is rooted in many cultures, but strongly in Latin Americans and Argentina, partly due to the strong migratory contribution of a century ago, was no stranger to this indelible mark. In the latest measurement available, through the National Census and the Permanent Household Survey, two thirds of the homes were occupied by their owners. However, this proportion is slightly less than three decades ago (68%) and marks a sharp drop from the recent peak reached in 2001, when it reached 75%.. This relative setback indicates that the crisis in the housing sector is not new. A slow, but seemingly inexorable slide.
Comparison. In the European Union, for example, the percentage of owners is 70%standing out in Latin countries and with a tradition of housing policies that favored the acquisition of low-income housing. In Romania, Hungary and Slovakia, for example, this percentage is above 90%, one step above Portugal (78%) and Spain (76%). Countries that also have a long-term mortgage market (30 years on average) and an interest rate in euros of 4% per year, but with some notable cases. In Portugal and France, for example, it is below 2% per year for some promoted lines.
The Argentine case presents its peculiarities in line with the erratic trajectory of macroeconomic variables in recent decades. The 1947 National Censusfor example, marked that only the 38% of homes were owner-occupied, but in the City of Buenos Aires said percentage was half (19%). From there, this proportion was altered thanks to the strong impulse of mortgage credit, housing plans and the framing of horizontal property as a way of buying parts of a larger unit. In the 2001 census, the proportion of owners was already 75% in the country as a whole. But then came the setback and the numbers evolved negatively: for last year, the country’s average was 66%. What happened in these two decades of retraction of almost 40 years in the matter? Two factors that, in turn, are linked, explain above all this situation: a persistent and very high rate of inflation that altered the calculation of the balance between salary and credit installment, on the one hand, and the increase in rents in terms of the average salary , for another. For George Hilleconomist of IDESA, Today we have, 20 years after the end of convertibility, fewer owners than in the ’80s, when there was also very high inflation, but there was less interventionist irrationality from the State. “Interventionist regulators who want to benefit the debtor do not realize that they end up harming him, because they are eliminating the possibility of new creditors,” he underlines. In 2002, the nascent dollar-denominated mortgage market was mortally wounded when the asymmetric pesification was decreed. Only at the end of 2016 did it have its ephemeral spring with the appearance of the indexation clauses with UVA (Purchasing Value Unit, an index that reflects the update of the CER carried out by the central bank) but which ended up drowning in the inflationary acceleration of 2018. The recent half approval of a norm to benefit mortgage debtors with this system once again proposes a distribution of income in favor of the current debtor (it is estimated that it would reach 90,000 borrowers) and to the detriment of futures due to the infeasibility of this system to re-grant loans to buy real estate.
Colina emphasizes that inflation is the basic restriction for the development of the mortgage market. In the absence of macroeconomic stability, obviously a lot of risk is generated in a long-term loan and ends up leading to an inflation adjustment system. “The problem is that when inflation accelerates, as it does above wages, the voluntaristic regulation comes along that says, well, let’s say, let’s say, that adjustment clause, let’s go for the lowest and there the mortgage ends up destroying it. ”, he concludes.
This difficulty in accessing their own home, a characteristic and aspirational note of Argentine social culture, suffered a serious setback and this explains why more and more families have to rent as an option. There are also differences between jurisdictions: while in the north of the country the proportion of tenants is no more than 10% of the total, in the City of Buenos Aires it climbs to 38%, somewhat higher than in the Patagonian provinces with a strong presence of migrant workers ( Tierra del Fuego and Santa Cruz) or even higher than the other provinces with strong urban centers (Córdoba, Santa Fe, Neuquén, Río Negro or even the Province of Buenos Aries itself) that exceed 20% of the total.
The market. The paralysis in the sector began before the pandemic or even the change of government in 2019: the uncertainty, the devaluation of 2018-19 marked a change of course that made what was, for example, an exploding market in 2017 come to an end. “Since 2018, it is possible to identify a downward trend in the housing real estate market, which manifested itself in the fall in the prices of properties for sale, which was accompanied, among other factors, by a drop in the supply of apartments for rent ( measured as the number of publications in Mercado Libre and based on the year 2018)”, points out the researcher of the University of San Andres (UDESA) Paula Margaleric. In addition, the exchange rate and the aforementioned implementation of the current rental law significantly affected the decisions of the owners to rent or sell their property. For his part, abigail riquelmealso from UDESA, clarifies that the aforementioned norm “includes several measures, such as the establishment of a minimum contract term of three years and adjustments in the rental value that takes as a reference a coefficient that is made up of 50% by the evolution of wages and the remaining 50% by the evolution of the CPI, which ended up being negative”.
not for rent. The Economist Federico Gonzalez Roucospecialist in the field and author of the book “Owners or tenants”, explains that the rental market depends on the type of demand for housing, economic activity, the size of the labor market and its complexity, educational and cultural opportunities; among so many factors. But what is noticeable is that the retraction of the offer was marking the difficulty to be able to rent and the looks apply to the double check: the conditions stipulated in the law marked demands that collided head-on with an economy that runs at the inflationary rate of 120% per year. In addition, the exchange gap and the reopening of international tourism gave impetus (as in the rest of the big cities in the world) to the temporary rental system by platforms (Airbnb is the best known but not the only one) that triples the price that can be obtain by the traditional system in some locations. “I think there is also prejudice and fear of evictions, but above all that the salary in dollars is very low and the cost of financing to access housing is high. A very complicated combination”synthesize.
A vicious circle in which short-term solutions became patches that ended up becoming ballast for the dream of owning a home. Or at least the ceiling within reach of the salary while the wheel is set in motion again.
