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Housing deficit: Only 7% of the homes built in the last 15 years were built by the State - Infobae
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April 3, 2024
A book that addresses the evolution of housing and mortgage credit confirmed this trend. Most houses are the result of private effort or self-construction
By José Luis Cieri
The lack of sustainable mortgage credit plays against access to home ownership in Argentina (Illustrative image Infobae)
In the recent research The Dream of Owning Your Own Home. Past, present and future of mortgage credit in Argentina by the lawyer and economist Federico González Rouco , published by the Tejido Urbano Foundation, highlights the historical problems of access to mortgage credit in the country.
It is estimated that there are 4 million households with housing problems in Argentina. “The prevailing political vision did not include the financial sector as a relevant actor in housing policy. Together with an unstable economy, it prevents the development of an accessible and sustainable credit market,” González Rouco told Infobae .
The objective of the work is to summarize the history of credit in Argentina and Latin America. The publication examines three significant periods in the history of mortgage credit in Argentina. Between 1947-1955, 1993-2000, and 2016-2018, notable increases were observed in the stock of mortgage credit as a percentage of GDP, doubling, quadrupling, and tripling, respectively.
González Rouco lamented. “These periods ended up being windows of opportunity and not the beginnings of a long-term transformation.”
According to data from the latest 2022 Population and Housing Census, only 65% of the Argentine population owns their home, a decrease of 10 percentage points since 2010.
Especially in the city of Buenos Aires, the proportion of homeowners fell to barely half of the population, that is, 50% of the population has their own home and tenancy has grown sharply in the last 15 years.
“One of the causes that would explain this phenomenon is the inability to pay for housing in the long term,” explained Pablo Roviralta , president of the Tejido Urbano Foundation, illustrating the problem with the local peculiarity where, metaphorically, “sneakers are bought in dues and departments in cash.”
Throughout its history, the country recorded few periods of mass access to mortgage credit. Although the idea of greater access persists in the collective imagination during the '90s, penetration levels were then low in relation to other Latin American countries.
The book also analyzes the challenges faced by young people in accessing housing and proposes solutions. (Photo: Getty)
Fernando Álvarez de Celis , executive director of Tejido Urbano, explained: “The lack of mortgage credit in Argentina is due to its chronic economic instability and the historical reluctance towards the intervention of the financial system in housing policy. Recessions, defaults and inflation contributed to this contrary vision. To implement it effectively, it is necessary to align housing policy with the capacity of the financial system to channel resources and transform savings into long-term credits.”
What should the State do
It is clear that the government's budgetary policies are not enough to resolve the housing deficit. According to calculations made by the Tejido Urbano Foundation, only 7% of the homes that were built between Census 2010 and Census 2022 were with public policies.
Cover of the book that is free and open access in its digital version but in paper format through the Tejido Urbano Foundation
Álvarez de Celis said: “The government should facilitate access to land, mortgage loans and create the possibilities for people who have some repayment capacity to promote housing development, which allows the generation of more units. The credit system with some subsidies should be the main driving force, accompanying land policies.”
Procreate: Is it useful or not?
The evolution of Procreate over the past 12 years has made it more of a shell than a defined program. Throughout different presidential mandates, from the time of Cristina Fernández de Kirchner , through the administration of Mauricio Macri , to the period of Alberto Fernández (recently ended), three different versions of this program were implemented.“The variability in Procreate's history makes it difficult to consider it as a coherent entity or uniform idea. Each government imposed its own approach to the program, creating confusion about its current validity and meaning. Although the works and credits from each period continue, Procrear lost its defined identity and purpose, adapting more to ongoing government policies,” said González Rouco.
How to get out of the deficit
Argentina is going through one of the worst times in terms of access to mortgage credit, either in market terms or in relation to the economy in general. And most of the homes were promoted by the private effort and self-construction of thousands of families.González Rouco added: “Another point of discussion is the perception that young people no longer aspire to home ownership, a notion that I consider debatable, suggesting that young people do aspire to have their own home. The book mentions a shocking fact: 40% of young people between 25 and 35 years old live with their parents or grandparents.”
Here you can see how Argentina's mortgage credit progressed compared to other countries in the region (Courtesy: Fundación Tejido Urbano)
Currently one of the main obstacles to accessing housing is the high cost of construction. In this sense, any system that reduces costs can be of great help.
“The idea that reducing the cost of construction, allowing for more affordable housing, not only expands access to credit but also reduces the fiscal impact should be explored. It is not the same to build a home for USD 50,000 as one for USD 40,000 or USD 35,000, which not only allows more people to access credit but also lowers its fiscal cost. New construction methods that reduce costs and facilitate self-construction in certain segments of the population must be taken into account,” said Álvarez de Celis.
To promote access to mortgage credit, specialists highlight the importance of strengthening the indexed unit (UVA) to make it more sustainable in the long term. “We also suggest the implementation of mortgage insurance as an additional measure,” González Rouco added.
Addressing the problems of the humble and poor classes, specialists highlight that economic stability, the reduction of inflation and growth are essential to improve the housing situation.
“Only 14% of Argentine households financed any part of their home. Measures such as the compensation fund and mortgage credit must be implemented to address housing needs immediately,” said González Rouco.
More tenants and fewer owners
Reflecting on the expansion of tenancy and possible solutions, although in several cities in the country it can be considered a positive development, it is also recognized that it can be problematic when people rent out of necessity and not by choice.
Comparison and x-ray by age of tenants in CABA
Tenancy is a natural consequence of the process of urbanization and densification of cities, but it can also be a result of the lack of housing alternatives .
“In the specific case of CABA, the increase in the tenant rate is related to urban development, driven in part by the lack of access to mortgage credit,” González Rouco concluded.
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