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How the rise of the free dollar impacted real estate operations - Infobae
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Cómo impactó la suba del dólar libre en las operaciones inmobiliarias
Se mantienen activas las consultas en el mercado, pero el vaivén del tipo de cambio hace repensar estrategias o demorar la decisión de compra
www.infobae.com
July 05, 2024
Consultations are still active in the market, but the fluctuations in the exchange rate make us rethink strategies or delay the purchase decision
By Jose Luis Cieri
Those who are about to buy with a mortgage loan must be very careful not to lose out to the rise of the blue dollar and to be able to cover the expenses prior to the acquisition of the home through bank financing.
Since the reintroduction of new mortgage loans, real estate agencies have registered an increase in enquiries and demand, but the instability of the blue dollar generates uncertainty and affects purchasing decisions.
In June, real estate agencies experienced a significant increase (approximately 30% compared to the previous three months) in enquiries and demand related to the purchase and sale operation through mortgage loans, both from potential buyers and sellers.
The society has generated great expectations following the announcements of some banks and the Government. However, a repeated comment among customers reported by the sector is the lack of adequate advice in bank branches, which increases uncertainty.
The acceleration of the exchange rate over the last 10 days has caused a certain slowdown in negotiations due to economic uncertainty. Currently, the free or blue exchange rate is fluctuating at $1,400 and is maintaining an increase of 30 pesos or 2.2 percent in July.
However, there are still bargain prices that have been gradually recovering for more than six months. In 90% of the neighborhoods in the city of Buenos Aires , prices have recovered up to 10% year-on-year.
Currently, there are an estimated 66,000 properties for sale in CABA, although not all of them are suitable for credit. This is mainly due to the fact that some of these properties are not in good building conditions or do not have the papers in order.
Miguel Chej Muse , coordinator of the Statistical Observatory of the Buenos Aires Real Estate Association, told Infobae that “the apartments most in demand by buyers with pre-approved mortgage loans for their first home are two-room properties of no more than 45 square meters, with a value of up to USD 90,000 in neighborhoods such as Caballito, Almagro, Villa Crespo, San Cristóbal, Boedo, Belgrano, Recoleta and Palermo.”
Exchange rate stability is an essential condition for carrying out a real estate transaction with a mortgage loan. The process, which usually takes at least two months, is seriously affected by the volatility of the blue dollar, which implies a considerable exchange rate risk and negatively affects the sector.
Federico González Rouco , an economist at the consulting firm Empiria, commented that “any exchange rate volatility is a macroeconomic problem. For the real estate market, it reduces the ability to access credit for anyone who wants to take out a loan. The movement in the value of a square meter in pesos, driven mainly by the rise in the dollar, exceeds people’s income, reducing their ability to access a mortgage loan. In this incipient credit context, this volatility does not help, especially when the mortgage market is going to move with the MEP.”
Indecision
The increase in the exchange rate, in most cases, causes buyers to postpone their purchasing decision.“The uncertainty about whether the credit granted in pesos will be sufficient to acquire the dollars needed at the time of the deed creates a great challenge. In this context, it is advisable to have additional support, whether through savings, family assistance or another loan,” added Chej Muse.
Smaller apartments are among those most in demand by those who are in the process of purchasing with a mortgage loan
In banks, enquiries are constant. For example, Banco Hipotecario reported that they have 46,000 registered users on the web and more than 150,000 simulations, of which 15% are for amounts greater than 100,000,000 pesos. Banco Macro received 20,000 enquiries in 20 days, showing great interest, especially from young people who can access up to 90% of home financing.
“There is enthusiasm for the new news, but this exchange rate volatility clearly slows down the start of the mortgage market. That is the main problem. And the first disbursements are still pending to make the operation effective,” added González Rouco.
What happens to those who use their own dollars?
On the other hand, those who have dollars in hand (especially those who were hoarding them under their mattress or recently sold a property) continue with their searches and carry out transactions, aware that square meters are currently cheap and that they can buy more square meters today than tomorrow.The number of enquiries had been increasing and negotiations were in the early stages, but in recent days there has been a cooling off. The market recognises that there are no longer so many counteroffers because demand is based on the fact that listing prices have dropped significantly, and owners do not accept discounts of more than 7% of the initial value. Now caution prevails.
Chej Muse concluded: “Hundreds of people are taking advantage of this opportunity to move to larger properties, anticipating future increases in the value of square meters that could make it difficult for them to grow in space.”
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