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In most of Latin America the minimum wage is not enough to rent a middle-class home - Infobae
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En la mayor parte de América latina el salario mínimo no alcanza para alquilar una vivienda de clase media
Un trabajo privado examinó la conexión entre los salarios mínimos y el costo promedio para un alquiler. La investigación compara el precio de departamentos en 17 ciudades del continente
www.infobae.com
March 10, 2024
A private paper examined the connection between minimum wages and the average cost of rent. The research compares the price of apartments in 17 cities on the continent
By José Luis Cieri
In their hands, a couple holds a miniature house, reflecting the current challenges in rentals throughout the Latin American region (Illustrative Image Infobae)
The problems in accessing housing rentals are replicated throughout Latin America, to the point that in most cities in the region a minimum wage is not enough to cover a monthly rent.
In Argentina, the situation is aggravated by the housing deficit, poor access to mortgage credit, high inflation and constantly changing regulations, factors that influenced the decrease in supply (especially until last December) and the increase of rental prices.
A change in the trend of the availability of units is progressively observed in several neighborhoods of the city of Buenos Aires and in various locations in the country. The implementation of the DNU of the new Government had a notable impact by expanding the offer significantly .
The Properati portal carried out an analysis that examined the relationship between the cost of renting middle-class homes and the minimum wage in 17 cities in the region.
In that sense, the work compared the average cost of renting an apartment in a representative middle-class neighborhood in each city with the minimum wage. The following graph illustrates this relationship:
Source: Properati, Lamudi (Mexico) and Trovit
In 16 of the 17 cities analyzed, more than 100% of the minimum wage is needed to cover the average rent for an apartment. In the cities of Mexico, a household needs approximately 3 minimum wages to cover the average rent. This is the highest ratio in the region.
In the Caballito neighborhood (CABA), in Nuestra Señora de Lourdes (Rosario) and in Alberdi (Córdoba capital), the average rent of an apartment in middle-class layouts is equivalent to 270%, 180% and 150% of a minimum wage, respectively.
Housing in Caballito. In this neighborhood, a two-room apartment costs $399,588 on a monthly average
Rent in Buenos Aires
In the current economic context of CABA, the cost of studio apartments reached a median of $280,000 per month according to the Scalabrini Ortiz Center for Economic and Social Studies (CESO), presenting challenges for the pockets of tenants. The Minimum Living and Mobile Wage, which was recently updated to $180,000 in February , covers only 55.5% of this rent.Virginia Brunengo, economist analyst at CESO, highlighted to Infobae that “the comparison between the increase in the cost of housing and the adjustment of the minimum wage reveals a growing gap, directly affecting the purchasing power of citizens. “There is increasing difficulty in meeting the monthly costs of rent.”
Although rental prices have remained stable since last February, with a 12% increase in studio apartments and variations in other categories, the month of February witnessed a notable drop in purchasing power, a remnant of economic difficulties. experienced in December and January.
“This phenomenon limited the ability of tenants to absorb future increases in rental prices. In addition, there was an increase in the supply of properties in dollars, rising to 41%, which represents an increase of 16 percentage points compared to January,” explained Brunengo.
In other latitudes and insufficient salary
The rental scenario in various cities on the continent presents a great challenge for those who depend on the minimum income. In 16 of the 17 cities analyzed, a minimum wage is insufficient to access middle-class housing.
View of the Chapultepec Forest in Mexico City, where the highest prices in the region are found (Photo: Pexels)
Properati highlights cases such as Mexico City (Narvarte neighborhood) and Guadalajara (Chapalita), where the average rent for a middle-class apartment reaches USD 1,295 and USD 1,281, respectively, equivalent to three Mexican minimum monthly salaries. The situation in Buenos Aires (Caballito) also stands out, where the average price amounts to USD 525, representing 2.7 minimum wages in Argentina.
In Lima (La Molina, Peru) and Monterrey (Rome, Mexico), the reality is similar, with a rental cost that requires 2.4 and 2.1 minimum wages respectively, translating into USD 660 and USD 907 per month.
Source: Properati, Lamudi (Mexico) and Trovit
“In other cities such as Panama City, Córdoba, Rosario, Medellín, Bogotá and Arequipa, a common pattern is observed: renting a middle-class apartment requires between 1.5 and 1.8 minimum wages. Examples include Panama City (El Cangrejo) with an average rent of USD 1,130 and Rosario (Our Lady of Lourdes) with USD 342, both equivalent to 1.8 minimum wages in their respective countries,” said Ricardo Meneses Flores , manager analyst . of LIFULL Connect data for Latin America.
In Medellín (La América) and Bogotá (Modelia), rents range between USD 523 and USD 510, representing approximately 1.6 Colombian minimum wages. Meanwhile, in Arequipa (Cerro Colorado, Peru) and Córdoba (Alberdi), the average rent is USD 417 and USD 296, equivalent to 1.5 minimum wages. In Cali (Valle del Lili), the average rent is USD 403, equivalent to 1.2 Colombian minimum wages.
In Quito (Ponceano) and Guayaquil (Alborada) in Ecuador, the average price is USD 485 and USD 434, representing 1.1 and 0.9 minimum wages respectively.
How much should you earn to pay the rent?
Properati calculated what the monthly income of a household should be in dollars so that the rent on a home does not exceed 40% of their earnings.According to the Organization for Economic Cooperation and Development (OECD), a household that spends more than 40% of its monthly income on housing (rent or mortgage) incurs a housing cost overload.
In the following graph you can see the panorama at the regional level.
Rentals in Latin America
To comply with the OECD recommendations regarding paying a maximum of 40% of income for rent, a household in Mexico City (Narvarte) requires an ideal salary of USD 3,236, while in Córdoba (Alberdi), an average USD 740 per month.
Meneses Flores concluded: “At a regional level, Mexico stands out for having the cities with the highest rental costs, such as Guadalajara and Monterrey, and therefore, the highest ideal incomes, while the most affordable options are found outside the capitals of Colombia, Ecuador and Argentina, in cities such as Cali, Guayaquil and Córdoba, respectively.”
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