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An economist provides key data to understand the “new” real estate market before investing in bricks - La Nacion Propiedades
Source:
www.lanacion.com.ar
October 18, 2024
The specialist analyzes the new players who have entered the real estate market in which nothing is guaranteed, but the bet is on
By Federico Gonzalez Rouco
Economist Federico González Rouco works with Lacunza and anticipated the launch of mortgage loans at the beginning of the year Santiago Cichero/AFV
Like no other productive sector, in 2024 construction faces a process of change in the factors that promoted investment until 2023 (many artificial or unsustainable, such as public works with monetary financing or an exchange gap that made materials cheaper in dollars) and now it must reorient itself to new segments :
First, the gap that in recent years had driven private residential construction given the possibility of accessing materials at low prices (in parallel dollars) was considerably reduced (150% to 20%). Then, the cost of construction , measured in the CCL dollar, rose 47% between November and August , with a greater increase in labor (49%) than in materials (42%).
On the demand side , while real wages are gradually improving (+9% between January and July), they are still 14% below the levels of July 2023. Finally, so far this year, spending on public works has fallen by 81% in real terms.
In this context, construction fell 22% in the first half of the year and will end the year with a significant drop , close to 18% (after having grown 1% in 2023).
In terms of inputs , those for general use (for public and private works) fell by 33% (there were accumulated stocks), with a greater impact on the typical provision of public works (such as asphalt, 57%).
On the other hand, those used mainly in private construction registered falls of over 30% year-on-year between March and May, but in June and July the decline slowed to 26% and 23%, respectively.
Construction fell 22% in the first half of the year
However, something seems to have changed since April. The relative stability of the exchange rate and construction costs, in parallel with the improvement in real wages and the plateauing of inflation, marked a context in which construction began to reverse its decline , growing for 4 consecutive months (8% monthly in July) and already accumulating 19% improvement (half of the total decline).
However, in August, that improvement was at least put on hold . Construction activity fell 2.9% monthly and, for September, the leading indicators were ambiguous: the Construya Index (focusing on residential construction) fell for the second consecutive month, but cement shipments improved 3% monthly.
But there are reasons to think that the end of 2024 will be positive and that it leaves 2025 in a good position .
In August, UVA mortgage loans were granted for $67 billion pesos (about 50 million dollars) and in September they exceeded 100 million dollars , something that had not happened for 6 years. It represents the largest volume of credit since the end of 2018 and double that of August, which was triple that of July, which was already triple that of June. The repetitive sequence is valid to frame the pace of growth . However, in perspective, it is still 80% below the 2017-18 peak and we may not see those levels for a long time, given that the social situation today is different and salaries are , in general, considerably lower than at that time. But it is within the expected margins, given that the 2020-2023 period was the one with the lowest mortgage credit in Argentine history.
On the other hand, in the first eight months of the year, the total volume of deeds grew 29% year-on-year in CABA and 13% in the Province of Buenos Aires . Deeds with mortgages seem to be just waking up: between January and July, in the city of Buenos Aires they had grown only 8% compared to the first seven months of 2023, but that changed in August, when deeds with mortgages grew 134% and, with that, 2024 has already accumulated an improvement of 32%. In the Province of Buenos Aires, on the other hand, they continue to fall and are 46% below the first 8 months of 2023. There is a lot of data, but it is a complex sector with many edges.
The average published value of property sales has grown by 6.3% since DecemberHernan Zenteno - THE NATION
In terms of prices , the impact is felt. The average published value of property sales has grown by 6.3% since December , almost exclusively due to expectations. But the upward trend could be consolidated as long as exchange rate stability and the drive of credit (and the possibility of financing the purchase of unfinished projects) are maintained, and in the hands of a demand that grows faster than the construction supply.
The improvement in key sectors of the economy such as mining and energy is seen as an opportunity, and has the indirect effect of developing nearby cities, which will promote investment in infrastructure, housing and services , with construction as the main input. This is already happening, but the potential is still impressive.
Finally, the money laundering process may provide an additional driver on the demand side . However, it is still too early to know a certain result and there is a warning: the money laundering component destined for works in progress will have to deal with this new high construction cost , which, on top of that, will possibly see further increases in the last part of the year, if the market dollar remains stable.
In short, the construction industry has to get used to working in a different scheme : with a smaller gap , with higher costs and with a greater supply of financing , whether through money laundering or mortgage loans. It is a scheme that is healthier and more sustainable in the long term, which allows us to stop thinking about how to produce and sell to the segment that pays in cash and start looking for a broader market, that of the middle class. Nothing is guaranteed, but the bet is on.
The author @FGRouco is an economist at @Empiriaweb and author of the book El sueño de la casa propia , among other titles.
www.buysellba.com
Source:
Un economista da datos clave para entender al “nuevo” mercado inmobiliario antes de invertir en ladrillos
El especialista analiza los nuevos actores que ingresaron al mercado inmobiliario en el que nada está garantizado, pero la apuesta está planteada
www.lanacion.com.ar
October 18, 2024
The specialist analyzes the new players who have entered the real estate market in which nothing is guaranteed, but the bet is on
By Federico Gonzalez Rouco
Economist Federico González Rouco works with Lacunza and anticipated the launch of mortgage loans at the beginning of the year Santiago Cichero/AFV
Like no other productive sector, in 2024 construction faces a process of change in the factors that promoted investment until 2023 (many artificial or unsustainable, such as public works with monetary financing or an exchange gap that made materials cheaper in dollars) and now it must reorient itself to new segments :
First, the gap that in recent years had driven private residential construction given the possibility of accessing materials at low prices (in parallel dollars) was considerably reduced (150% to 20%). Then, the cost of construction , measured in the CCL dollar, rose 47% between November and August , with a greater increase in labor (49%) than in materials (42%).
On the demand side , while real wages are gradually improving (+9% between January and July), they are still 14% below the levels of July 2023. Finally, so far this year, spending on public works has fallen by 81% in real terms.
In this context, construction fell 22% in the first half of the year and will end the year with a significant drop , close to 18% (after having grown 1% in 2023).
In terms of inputs , those for general use (for public and private works) fell by 33% (there were accumulated stocks), with a greater impact on the typical provision of public works (such as asphalt, 57%).
On the other hand, those used mainly in private construction registered falls of over 30% year-on-year between March and May, but in June and July the decline slowed to 26% and 23%, respectively.
Construction fell 22% in the first half of the year
However, something seems to have changed since April. The relative stability of the exchange rate and construction costs, in parallel with the improvement in real wages and the plateauing of inflation, marked a context in which construction began to reverse its decline , growing for 4 consecutive months (8% monthly in July) and already accumulating 19% improvement (half of the total decline).
However, in August, that improvement was at least put on hold . Construction activity fell 2.9% monthly and, for September, the leading indicators were ambiguous: the Construya Index (focusing on residential construction) fell for the second consecutive month, but cement shipments improved 3% monthly.
But there are reasons to think that the end of 2024 will be positive and that it leaves 2025 in a good position .
In August, UVA mortgage loans were granted for $67 billion pesos (about 50 million dollars) and in September they exceeded 100 million dollars , something that had not happened for 6 years. It represents the largest volume of credit since the end of 2018 and double that of August, which was triple that of July, which was already triple that of June. The repetitive sequence is valid to frame the pace of growth . However, in perspective, it is still 80% below the 2017-18 peak and we may not see those levels for a long time, given that the social situation today is different and salaries are , in general, considerably lower than at that time. But it is within the expected margins, given that the 2020-2023 period was the one with the lowest mortgage credit in Argentine history.
On the other hand, in the first eight months of the year, the total volume of deeds grew 29% year-on-year in CABA and 13% in the Province of Buenos Aires . Deeds with mortgages seem to be just waking up: between January and July, in the city of Buenos Aires they had grown only 8% compared to the first seven months of 2023, but that changed in August, when deeds with mortgages grew 134% and, with that, 2024 has already accumulated an improvement of 32%. In the Province of Buenos Aires, on the other hand, they continue to fall and are 46% below the first 8 months of 2023. There is a lot of data, but it is a complex sector with many edges.
The average published value of property sales has grown by 6.3% since DecemberHernan Zenteno - THE NATION
In terms of prices , the impact is felt. The average published value of property sales has grown by 6.3% since December , almost exclusively due to expectations. But the upward trend could be consolidated as long as exchange rate stability and the drive of credit (and the possibility of financing the purchase of unfinished projects) are maintained, and in the hands of a demand that grows faster than the construction supply.
The improvement in key sectors of the economy such as mining and energy is seen as an opportunity, and has the indirect effect of developing nearby cities, which will promote investment in infrastructure, housing and services , with construction as the main input. This is already happening, but the potential is still impressive.
Finally, the money laundering process may provide an additional driver on the demand side . However, it is still too early to know a certain result and there is a warning: the money laundering component destined for works in progress will have to deal with this new high construction cost , which, on top of that, will possibly see further increases in the last part of the year, if the market dollar remains stable.
In short, the construction industry has to get used to working in a different scheme : with a smaller gap , with higher costs and with a greater supply of financing , whether through money laundering or mortgage loans. It is a scheme that is healthier and more sustainable in the long term, which allows us to stop thinking about how to produce and sell to the segment that pays in cash and start looking for a broader market, that of the middle class. Nothing is guaranteed, but the bet is on.
The author @FGRouco is an economist at @Empiriaweb and author of the book El sueño de la casa propia , among other titles.
www.buysellba.com
