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An economist reveals that property prices will rise by up to 40% - La Nacion Propiedades
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Un economista revela que los precios de las propiedades subirían hasta un 40%
Es uno de los analistas más escuchados y anticipa claves del sector para el 2025
www.lanacion.com.ar
March 14, 2025
He is one of the most listened to analysts and anticipates key aspects of the sector for 2025.
By Maria Josefina Lanzi
Economist Esteban Domecq anticipated the key factors for the sector by 2025.Ricardo Pristupluk
The real estate market experienced a significant boost in 2024 , and the numbers across all sectors indicate positive results. The price per square meter grew almost 7% in one year in the City of Buenos Aires, and sales transactions exceeded 2023 by 35%. The sector remains optimistic and expects 2025 to surpass 2024, which was already a great year.
In this context, Esteban Domecq, one of the most popular economic analysts among businesspeople and financial agents, outlined key aspects of the sector for 2025. The meeting took place within the framework of a real estate event bringing together market players, organized by Predial Propiedades, the company that is both a real estate developer and a real estate company.
- Last year, the average square meter of listing value rose 6.8%, which was encouraging for the market, as it had been declining for five years. How much do you expect it to rise this year?
- I'm seeing a bullish real estate market in Argentina for used square meters. Today, prices in this sector are up almost 10% compared to the last year and a half, and I think that trend will continue. In terms of magnitude, a 30-40% increase practically recovers what was lost in the last five to six years, since, from the beginning of the crisis in 2018 until now, property prices have fallen by almost 40% on average in the City of Buenos Aires. I think that trend will continue.
Just to recover those values, we're talking about a 20%, 30%, or even 40% increase, although in terms of how long it will take to do so, it's difficult to say, but it could easily be two, three, or four years.
The square meter grew almost 7% in one year in the City of Buenos Aires Uladzimir Zuyeu - Shutterstock
- Property sales in the city of Buenos Aires grew 93.7% year-over-year in January. How much do you think these transactions could grow in 2025?
- Like the square footage, I also think sales transactions will increase. The peaks recorded in the city of Buenos Aires were around 70,000 and 80,000 deeds—2024 closed with almost 55,000 real estate transactions in Buenos Aires—and today there's a long upward trend in deed volumes.
-In recent months, the government has taken measures to boost the sector, such as the implementation of a more agile and simplified securitization system, the elimination of the Real Estate Transfer Tax, and the elimination of parking fees for mortgage loan transactions, among others. Do you think there are any milestones missing for the sector to fully take off?
I believe that what is needed for the sector to fully grow is primarily linked to more macroeconomic aspects, which have to do with moving forward and completing this stabilization process that has been underway. This has to do with addressing the issue of inflation in Argentina, seeking to bring it to levels similar to those in the region.
Furthermore, as we are in the context of phase two of the economic program to make the exchange rate more flexible, which allows for closing the gap and finding a more balanced exchange rate, the equation of construction costs and property prices could be leveled: setting aside the rise in construction costs with low prices (which do not respond to this increase), and achieving higher values and achieving the strong growth that costs had last year, when they doubled.
These measures would then lead to a reduction in financing costs and bolster mortgage lending , since a stable economy is one without inflation; without inflation, interest rates fall sharply and credit expands. This credit, in a context of stability and the ongoing restructuring of dollar income, will greatly boost the real estate sector. But all of this has to do with macro aspects, not so much with micro-sector policies.
- Since the introduction of mortgage loans in April of last year, there has been an increasing number of people interested in purchasing a property. The loan continues to drive transactions, something that was evident in January's deeds, when 26% of transactions were made with a mortgage. What do you predict for this year?
I think this will continue. The real estate market is very active, very dynamic in terms of deeds, business volumes, and also in the mortgage sector. I believe that, within the framework of a stabilized economy, with public accounts in order, the financial system is beginning to reorient itself again toward the private sector, and therefore, there is a lot of money available in banks to continue supporting the mortgage lending sector. I believe this process is just beginning and will be a very important lever for the real estate market in the coming years. The measures implemented regarding the securitization system to give it further impetus were very positive.
Property sales in the City of Buenos Aires grew by 93.7% year-on-year in January.FreePik
- Since last November, a piece of news has been troubling the real estate market: 12 banks raised interest rates on mortgage loans after launching them . What are your thoughts on these increases?
I think it's partly due to the initial turbulence we've been experiencing in the financial and foreign exchange markets for the past two or three months, in a context of greater monetary rigidity, a decline in Argentine assets, and awaiting the outcome of the agreement with the IMF. I think this phenomenon should be temporary. As soon as the new agreement with the International Monetary Fund is finalized, we should see general rates decline, and in mortgage lending in particular, interest rates should decline. These are rates that could and should decline, not only because of the agreement with the Fund, but also due to an economy that continues to stabilize.
-The elimination of the exchange rate restriction has been on the President's agenda for some time. How might the lifting of the exchange rate restriction affect property prices?
- I think it will be favorable. That's why I say one of the drivers for further revitalizing the real estate market is to continue with the normalization of the exchange rate system, something that involves easing restrictions on the currency controls. Hand in hand with that, more agile, freer access to the exchange market would allow a dollarized sector, like the real estate market, to have greater dynamism on the demand side. As demand increases, prices will rise—in addition to other factors that will also continue to push up values. In short, the easing of restrictions, which will be a gradual process, will continue to support real estate in Argentina.
-The government introduced divisible mortgages for development projects at the end of last year . What do you think of this measure?
- I think it's a very good decision. I'm no expert on the subject, but I think they could be very effective and could be implemented sooner or later if the legal framework is resolved. Banks will be very interested in granting credit, since, previously, the pesos held by the financial system ended up in the Central Bank or the Treasury. Once the Central Bank and public sector accounts are healthy, those pesos have to return to the private sector. In that sense, any new mechanism that can be generated to boost different sectors, including real estate , is very valuable; it's a matter of finding a way around it.
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