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Mortgage loans: the data that surprised the real estate market: is there a boom? - La Nacion Propiedades
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www.lanacion.com.ar
Septmber 09, 2024
Specialists expected August to double July, but not triple it. This figure surprised the sector, but in a good way.
By Candle Contreras
Mortgage loans: in August, three times as many mortgage loans were granted than in July, making it the best month of 2024Archive
The boom in mortgage loans that emerged from the hand of 21 banks meant a radical change for the Argentine real estate market . But, for the market to reactivate with loans, two things are needed: supply and demand . The supply appeared in April with the return of the UVA and the analysts were waiting to see what would happen with the demand... and that demand arrived .
August was the month with the highest number of mortgage loans granted in 2024. According to data provided by specialist Federico González Rouco, who recently published his book entitled The Dream of Owning a Home , during the eighth month of the year, $67 billion in loans were granted to individuals, that is, around 500 loans - taking as an average the square meter of a two-room apartment in the city of Buenos Aires: US$1,825/m2 according to the latest data collected by Reporte Inmobiliario - three times as much as in July ($21 billion, about 190 loans).
“It is the highest level since 2018-2019 and far exceeds those granted between December 2023 and June 2024, which was a total of US$25 million - a total of 20 loans per month,” the economist shares. In this context, the euphoria over the new loans is understandable , since they appear at a time when accessing housing through financing seemed like a dream .
This rebound is encouraging for the real estate market , even though it is below the levels of 2017/2018 - when the $500 billion mark was exceeded. “The improvement in the market is widely noticeable and it is being faster than it was in 2016 - when the UVA began - but there is still a long way to go,” says the specialist, adding that “since credit processes are slow at the beginning , but abrupt at the end, it is possible to expect that 2024 will be a year of transition, looking towards a 2025 that should be considerably better, if the economic situation manages to stabilize.”
August was the month with the highest number of mortgage loans delivered in 2024FreePik
“A series of factors aligned as a result of so many banks offering their mortgage credit lines almost simultaneously. Both public and private banks came out to offer loans for the purchase of real estate, mainly in the case of used properties, this is because the vast majority of them are mortgageable almost immediately,” says Andrés Sicouly, manager of Interwin .
The return of UVA credits, despite initial criticism of their inflationary adjustment, seems to offer an opportunity in a market that had been stagnant for years . The low level of default, barely 1% according to González Rouco, shows that, although the installments may rise with inflation , the debtors managed to meet their obligations .
“It makes sense that people decide to take the risk of taking out loans, because it can be considered a savings account. That is, if someone cannot pay the loan, they can always sell the property and settle the debt,” says Diego Cazes, general manager of LJ Ramos.
Why was the response from people quicker this year than in 2016? The difference with that year is that “ there is more knowledge of UVA than there was when it first emerged, but above all there is more conviction that it is the only valid mechanism for a person to be able to buy their own home,” says Rozados.
González Rouco agrees with the founder of Reporte Inmobiliario and adds that economic stabilization is key for this recovery to be sustained over time : “Salaries began to grow above inflation in recent months, but they still do not compensate for the loss of purchasing power accumulated in recent years.”
Achaval emphasizes this point: “ Today, salaries are 37% lower in dollars than at the peak in 2017/2018, so the increase in demand is not yet fully reflected in the number of operations.”
Analysts agree that mortgage credit is the only option for more people to be able to access their own home.Hernan Zenteno - The Nation/Hernan Zenteno
According to experts, the solution will be the evolution of wages and their ability to stay above inflation . Only then will the long-awaited mortgage boom become a reality , consolidating the recovery of the real estate market in Argentina.
Rozados points out that many credit applications are still in process, so it is likely that the numbers of grants and deeds will continue to increase in the coming months. “ Credit was absent for more than six years , and many did not even know that there was the possibility of buying a home instead of renting. Today, people are more convinced that UVA credit is a viable option for buying ,” says José Rozados, founder of Reporte Inmobiliario .
For its part, an alternative that excites the sector is money laundering , as an additional factor that could further boost the market. The expectation is that access to credit will continue to improve in the coming months . “Money laundering helped credit this last month, it is a very complementary tool to credit and everything is in place for it to be so,” says Alejandra Covello, president of the real estate company of the same name. “ The real estate market is very transparent and when a product works, it shows ,” she adds hopefully.
“These are loans that are being taken out mainly for the purchase of apartments of up to US$100,000. There was a huge deficit in terms of loans and money laundering further boosted the market ,” Covello stresses. In turn, he points out that although he does not expect a radical rise in prices in the coming months, 2025 could show a significant difference in the real estate market.
With money laundering and mortgage lending booming, the real estate market is showing signs of recoveryArchive
The real estate market is showing signs of recovery , with property prices on the rise since the middle of last year. Currently, the value per square meter in the city of Buenos Aires is at US$2,301 , 7% above the minimum recorded in June 2023, but still 17.8% below the historical maximum of March 2019 , according to data from Zonaprop. Specialists agree that, although prices are still low in historical terms , the inflationary context and fluctuations in the dollar will be decisive in the coming months.
In a context in which the sale values of properties remain low, specialists agree that those who buy now could have a margin to gain .
Now, we have to see what happens with salaries and how they compete with the increase in the square meter , "because if the m² increases, more salary in dollars is needed," explains Rouco, and shares that "this jump in credits will impact the square meter, but if salaries do not improve, despite having stabilized in recent months, it will be very difficult to sustain."
Which apartments are likely to increase in price with the loans? Cazes predicts that smaller and lower-value apartments, especially those between US$80,000 and US$200,000, will see the biggest price increases. “Seventy percent of people buy apartments, not houses, so there is a huge impact on a limited supply,” he says.
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Créditos hipotecarios: el dato que sorprendió al mercado inmobiliario ¿hay un boom?
Los especialistas esperaban que agosto duplique a julio, pero no que lo triplique. Este dato sorprendió al sector, pero en el buen sentido
www.lanacion.com.ar
Septmber 09, 2024
Specialists expected August to double July, but not triple it. This figure surprised the sector, but in a good way.
By Candle Contreras
Mortgage loans: in August, three times as many mortgage loans were granted than in July, making it the best month of 2024Archive
The boom in mortgage loans that emerged from the hand of 21 banks meant a radical change for the Argentine real estate market . But, for the market to reactivate with loans, two things are needed: supply and demand . The supply appeared in April with the return of the UVA and the analysts were waiting to see what would happen with the demand... and that demand arrived .
August was the month with the highest number of mortgage loans granted in 2024. According to data provided by specialist Federico González Rouco, who recently published his book entitled The Dream of Owning a Home , during the eighth month of the year, $67 billion in loans were granted to individuals, that is, around 500 loans - taking as an average the square meter of a two-room apartment in the city of Buenos Aires: US$1,825/m2 according to the latest data collected by Reporte Inmobiliario - three times as much as in July ($21 billion, about 190 loans).
“It is the highest level since 2018-2019 and far exceeds those granted between December 2023 and June 2024, which was a total of US$25 million - a total of 20 loans per month,” the economist shares. In this context, the euphoria over the new loans is understandable , since they appear at a time when accessing housing through financing seemed like a dream .
This rebound is encouraging for the real estate market , even though it is below the levels of 2017/2018 - when the $500 billion mark was exceeded. “The improvement in the market is widely noticeable and it is being faster than it was in 2016 - when the UVA began - but there is still a long way to go,” says the specialist, adding that “since credit processes are slow at the beginning , but abrupt at the end, it is possible to expect that 2024 will be a year of transition, looking towards a 2025 that should be considerably better, if the economic situation manages to stabilize.”
August was the month with the highest number of mortgage loans delivered in 2024FreePik
“A series of factors aligned as a result of so many banks offering their mortgage credit lines almost simultaneously. Both public and private banks came out to offer loans for the purchase of real estate, mainly in the case of used properties, this is because the vast majority of them are mortgageable almost immediately,” says Andrés Sicouly, manager of Interwin .
The return of UVA credits, despite initial criticism of their inflationary adjustment, seems to offer an opportunity in a market that had been stagnant for years . The low level of default, barely 1% according to González Rouco, shows that, although the installments may rise with inflation , the debtors managed to meet their obligations .
Can we talk about a credit boom?
Despite the optimism generated by these numbers, as various specialists consulted by LA NACION are hopeful, they warn that a complete “boom” has not yet been achieved . “Although the increase is notable and the acceleration with respect to 2016 is evident, the economic context is not as favorable as in the boom years of UVA credits ,” says Fabián Achaval, CEO of the real estate company of the same name.“It makes sense that people decide to take the risk of taking out loans, because it can be considered a savings account. That is, if someone cannot pay the loan, they can always sell the property and settle the debt,” says Diego Cazes, general manager of LJ Ramos.
Why was the response from people quicker this year than in 2016? The difference with that year is that “ there is more knowledge of UVA than there was when it first emerged, but above all there is more conviction that it is the only valid mechanism for a person to be able to buy their own home,” says Rozados.
González Rouco agrees with the founder of Reporte Inmobiliario and adds that economic stabilization is key for this recovery to be sustained over time : “Salaries began to grow above inflation in recent months, but they still do not compensate for the loss of purchasing power accumulated in recent years.”
Achaval emphasizes this point: “ Today, salaries are 37% lower in dollars than at the peak in 2017/2018, so the increase in demand is not yet fully reflected in the number of operations.”
Analysts agree that mortgage credit is the only option for more people to be able to access their own home.Hernan Zenteno - The Nation/Hernan Zenteno
Salaries: a barrier to access to credit
In concrete numbers, wages , despite having stabilised in the last two months (in June, they again grew above prices , increasing by 6.2% compared to a CPI of 4.6% in the same month), continue to lag behind prices in the year-on-year measurement : 216.3% against 271.5%, and represent a significant limit to access to credit. This difference is fundamental, since the evolution of inflation determines the increase in the UVA quota and the ups and downs of the real salary since December further complicated the situation, with a fall of 25% compared to inflation. " The key is that the salary grows more than inflation ," concludes González Rouco.According to experts, the solution will be the evolution of wages and their ability to stay above inflation . Only then will the long-awaited mortgage boom become a reality , consolidating the recovery of the real estate market in Argentina.
Rozados points out that many credit applications are still in process, so it is likely that the numbers of grants and deeds will continue to increase in the coming months. “ Credit was absent for more than six years , and many did not even know that there was the possibility of buying a home instead of renting. Today, people are more convinced that UVA credit is a viable option for buying ,” says José Rozados, founder of Reporte Inmobiliario .
For its part, an alternative that excites the sector is money laundering , as an additional factor that could further boost the market. The expectation is that access to credit will continue to improve in the coming months . “Money laundering helped credit this last month, it is a very complementary tool to credit and everything is in place for it to be so,” says Alejandra Covello, president of the real estate company of the same name. “ The real estate market is very transparent and when a product works, it shows ,” she adds hopefully.
“These are loans that are being taken out mainly for the purchase of apartments of up to US$100,000. There was a huge deficit in terms of loans and money laundering further boosted the market ,” Covello stresses. In turn, he points out that although he does not expect a radical rise in prices in the coming months, 2025 could show a significant difference in the real estate market.
With money laundering and mortgage lending booming, the real estate market is showing signs of recoveryArchive
What will happen to property values?
The big question is: will this increase in loans affect the value of properties? Although some analysts say that prices could rise due to the increase in demand, others say that the impact will not be uniform . “In neighborhoods and towns where there was already activity without loans, it is likely that there will be an increase in prices. But in areas with little activity, such as the south of Buenos Aires, the main consequence will be a mobilization of operations rather than an immediate increase in values,” says Rozados.The real estate market is showing signs of recovery , with property prices on the rise since the middle of last year. Currently, the value per square meter in the city of Buenos Aires is at US$2,301 , 7% above the minimum recorded in June 2023, but still 17.8% below the historical maximum of March 2019 , according to data from Zonaprop. Specialists agree that, although prices are still low in historical terms , the inflationary context and fluctuations in the dollar will be decisive in the coming months.
In a context in which the sale values of properties remain low, specialists agree that those who buy now could have a margin to gain .
Now, we have to see what happens with salaries and how they compete with the increase in the square meter , "because if the m² increases, more salary in dollars is needed," explains Rouco, and shares that "this jump in credits will impact the square meter, but if salaries do not improve, despite having stabilized in recent months, it will be very difficult to sustain."
Which apartments are likely to increase in price with the loans? Cazes predicts that smaller and lower-value apartments, especially those between US$80,000 and US$200,000, will see the biggest price increases. “Seventy percent of people buy apartments, not houses, so there is a huge impact on a limited supply,” he says.
www.buysellba.com
