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Real estate market 2024: Amid doubts about prices, mortgage credit and construction will be key - Infobae
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Mercado inmobiliario 2024: en medio de dudas por los precios, el crédito hipotecario y la construcción serán claves
Hoy hay más de 130.000 viviendas en ejecución de la mano privada en CABA y la provincia de Buenos Aires
www.infobae.com
January 1st, 2024
Today there are more than 130,000 homes under private construction in CABA and the province of Buenos AiresBy Jose Luis Cieri
A busy year is expected despite complex macroeconomic issues. A change in the national political cycle fuels optimism (Photo Courtesy: Criba)
Despite the strong challenges posed by the Argentine economy, marked by the dollar, inflation and recession, experts in the real estate sector maintain that it is a strategic moment for the start of projects, be it the construction of new homes or the renovation of existing properties. The recent inauguration of President Javier Milei and the change in government cycle generated expectations and challenges that will shape the Real Estate landscape.
Those who have a positive expectation about the economic-financial cycle believe that the eventual reduction in the inflation rate and economic stabilization will allow a revaluation of real estate assets.
“As far as real estate development is concerned, an increase in construction costs is expected in the coming months. Projects underway could face considerable increases in the prices of construction materials, at least until imports are normalized, projected for the second half of 2024. In addition, the possibility of delinquency in trust fees is expected due to the recession and a decrease in well sales due to the prevailing uncertainty,” said Damián Tabakman, president of the Business Chamber of Urban Developers (CEDU) to Infobae.
Considering the trend of rising prices in dollars, the conclusion is that it would be a favorable time to invest in real estate and accelerate construction projects. “Those who choose to maintain smaller holdings could face losses. The recommendation is to invest before dollar costs increase, especially taking advantage of the money laundering to come,” Tabakman added.
Expectations
Positive expectations also lead to the repeal of the Rental Law, so that owners can once again offer their homes for rent and to encourage the purchase of land for rental purposes.The change of authorities provides the opportunity to promote growth through the promotion of private works, taking as a reference the successful Uruguayan Promovida Housing model, which provides tax benefits to builders and investors. This measure would expand job creation, foreign currency income and attack the shortage in the housing market.
It is key to reduce inflation and promote financing (Photo: Getty)
Pedro Brandi, president of Grupo Construya, which brings together various construction materials factories, emphasized the importance of the economic climate. “It will be crucial to address various macroeconomic distortions and guarantee savings capacity for the population: it is essential to control inflation and launch mortgage credit proposals,” he stressed.
The growth of the sector requires, above all, certainty and actions that encourage those with savings to invest in bricks or dry construction. “The push in the sector comes mostly from people seeking to secure their investments in works to enhance their home, either through renovations or purchases of homes in a well. However, it is vital to establish credit mechanisms that drive full expansion,” Brandi added.
Construction and cost increase
Between the city of Buenos Aires and the province of Buenos Aires, it is estimated that there are more than 130,000 homes under construction. The average value per m2 (according to the Construction SMEs Association Index) to build homes currently oscillates at $741,341.65 (according to the official exchange rate, the price in dollars is now USD 895 per m2), and registers an increase of more than 200% year-on-year and has also been climbing in dollars, but still far from the USD 1,700 that it reached in 2017.The current conditions of the sector, focused on the development of new housing, present opportunities due to prices, which have fallen to levels from at least a decade ago. This phenomenon could signal the beginning of a recovery cycle since last June, although the speed and magnitude of this recovery are subject to the macroeconomic policy decisions of the new government.
According to Ariel Venneri, founding partner of the MAHE Group and finance consultant, for private construction the first measures adopted by the government, “particularly in terms of monetary policy, without a clear stabilization plan yet being perceived, generated a complex situation".
“The spike in material prices, driven by the fall of the MEP dollar in the last 15 days, presents an unsustainable increase in the cost of construction measured in dollars in the short and medium term. The evolution in the coming months will be crucial,” he told Infobae.
Materials rose more than 200% due to inflation, and it is estimated that the increases would not stop in the immediate future.
“Regarding the prices of used and brand-new homes, the recovery starting in the middle of this year indicates profitability opportunities for investors and buyers who have savings, given the limited access to credit. This reactivation also caused a marked decrease in the stock of used homes, reversing a trend of sustained growth for almost four years,” Venneri added.
Buy and sell
Regarding Real Estate in general, specialists perceive that 2024, once the initial impact of government policies has been overcome, will be promising. Ezequiel Wierzba, from Click Apars, commented that market stability “usually motivates the activity of investors and buyers; We trust that these conditions foster an active environment. In relation to the prices of used and brand-new homes, we anticipate that they will remain stable at least during the first half of 2024. If activity rebounds significantly, it is plausible that an increase in unit values will be observed.
Experts maintain that the Innovation Park and neighborhoods in Núñez will be promoters of the construction expansion of housing for what is to come
According to the Properati portal, prices in Buenos Aires fell 0.2% in dollars during the year. In the ranking of the most expensive cities in Latin America, the Argentine capital fell to seventh place (last March it was in fourth); Based on our own analysis, homes average USD 2,238 per square meter.
From 2018 to the end of 2023, they fell between 38% (brand new units) and 48% (used) according to different sector surveys.
Rafael Baigún , from Baigún Inmobiliaria, said: “Most likely due to the increase in costs in pesos. If there is stability in the free dollar, this increase will be transferred to the prices of the units; This increase will also impact the value of the finished product. So, if finished units increase, used values will surely go up.”
Experts maintain that there may be a very slight correction for the second semester, as long as a process of stabilization of the economy has begun to be seen. “If the State reforms are approved, if public spending falls and monetary issuance slows down, it may happen that within a year we will begin to see some process of upward price correction,” said Federico Gagliardo, from Vitrium Capital.
Missing
Expectations focus on the availability of mortgage loans, an essential component for market dynamism.
In order to generate more operations, it is expected that mortgage credit will return to impact the purchase and sale of used and brand-new units.
“It would be ideal for trust in the government to be strengthened and for facilities to be implemented so that more families can access their own home,” commented Wierzba.
Gagliardo concluded: “The sector needs to grow, to receive investments and to be credible. It is important that, if the latest measures are approved, they are maintained in the coming decades since investors are not looking at 4 years, but at the long term. This is the great challenge that Argentina has in the future.”
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