April 2020 will be remembered as the worst moment in the history of the real estate market, a month in which only four deeds were carried out in 30 days. However, the sector traces the turning point of the business to 2018. “It all started when the mortgage loans ran out; at that time our economic pandemic began”remember Armando Pepe, director of the Federal Council of Real Estate Associations. Jose Rozadosfrom Real Estate Report match: “The decline in values began from the second half of 2018 to mid-2019 in a very slight way to deepen after the STEPS of that year and continue much more pronounced from the pandemic and confinement in March 2020”.
From that turning point, the business collapsed until reaching the reality of these times: even with low prices, demand does not react. “In the framework of the CABA, which is the sphere of interference of our College, the reality is that not only do we still not see a recovery, but quite the opposite. The level of deeds remains at historical lows and there is nothing to indicate that there may be a takeoff in the short term”, he describes Martha Liottopresident of College of Real Estate Brokers.
According to a survey carried out by the real estate portal Zonaprop, the average price in the City of Buenos Aires is US$ 2,344 per m2 and decreased compared to the previous month. “The speed of the fall slows for the sixth consecutive month. In July the drop was 1% and currently 0.4%. However, since the maximum point reached in 2019, prices have accumulated a drop of 16.3%”, indicates the report.
28% of apartments for sale were downgraded in the last 6 months. The percentage of revalued records four consecutive months in decline, which pushes the slowdown in the rate of decline in sales prices. “On average, the discount made in the last 6 months remains stable at 8%”, adds Zonaprop. “Historically, properties have never been worth less than they are now. The price tends to go up. The economy will help. Argentines should invest in real assets, which are properties. People in a pandemic didn’t move, they didn’t buy. It’s the same thing that happened in gastronomy or tourism,” he adds. Alexander Geneva, from CNG Group.
Floor. For Pepe, prices are at a floor, since he is one of those who maintains the position that “they will not go down any more”. Traders speak of an average drop of 15% in theory, but up to 25/30% in practice. “The final number is established by the ‘law of the market’, the law of supply and demand”, emphasizes Pepe. Liotto confirms this fact: “The estimates that we handle in the Real Estate Professional College show us that in the CABA there was an average fall of between 25 and 30%”.
Today, the price of a two-room apartment (50 m2) is US$121,000, while a three-room unit (80 m2) reaches US$173,000, according to Zonaprop. “Although in April 2018 90% of the neighborhoods registered a price increase, currently that percentage drops and stands at 85%,” the survey expands. Did the values reach a floor? PFor Ginevra, in the case of wellhead units, “if the blue dollar goes up, an apartment will go down, since the cost of building will also go down. “But if we talk about finished or used units, that has to do with market conditions. The used one chases the price of the new one and if the new one goes down, the used one should also go down”.
Places. Regarding purchase-sale operations: the volume of deeds in 2021 was 84% higher than in 2020, but remained 14% below 2019 and 55% less than 2018.
Likewise, hehe neighborhoods of Puerto Madero (US$5,566/m2), Palermo (US$3,036/m2) and Belgrano (US$2,908/m2) lead the price ranking in CABA. For its part, Barracas is in the middle zone with a value of US$2,139/m2 and the cheapest are Lugano, Nueva Pompeya and La Boca with costs of US$1,133/m2, US$1,572/m2 and US$1,636/m2, respectively..
Where is the demand going? For Ginevra, “the first thing that moves are the most expensive assets, luxury goods, and then the spillover effect occurs and validates the entire market. During the pandemic they were the best sellers. Lo first demanded were the most expensive properties. Afterwards, it will be passed to the girls. small apartments with balconies, barbeque, matching amenities”.
There is a fact that does not go unnoticed by the different actors in this sector: the relationship of income with respect to the value of the square meter. “Even with the price reduction, it is among the worst in history, where an average registered wage earner would have to pay his full income for more than 14 years to buy a standard used house of 42 m2”, points out Rozados. To get a comparative idea of this salary “effort” rate to buy a home, in Spain it is 6.4 years and to acquire a property that doubles in surface area to that of Argentina. “To all this must be added that mortgage credit is today a pipe dream in an Argentina with an annual inflation rate of 50%”, concludes Rozados. One of the reasons why properties are only for a few, even at these auction prices.
Marcelo Alfano
by Marcelo Alfano
