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Rentals: Are the prices of apartments on the market increasing less than inflation? - La Nacion Propiedades
Source:
www.lanacion.com.ar
November 05, 2024
A report revealed the rise in prices of apartments offered on real estate platforms
Neighborhood by neighborhood, how much does it cost to rent an apartment?Image Point Fr - Shutterstock
Although the rental listing prices on the main real estate sites continue to rise , the trend of the last two months changed in October : the increase was below inflation . Thus, in the tenth month of the year the average value grew by 3.4% , according to the latest report from Zonaprop , while the Consumer Price Index (CPI) data was 3.5% in September (last data collected by INDEC).
It should be noted that the contracts established according to these values are agreed upon under contractual freedom , as of the repeal of the rental law reflected in Javier Milei's DNU on December 29, 2023; while the contracts under the same are still in force : those that are updated annually by the Lease Contract Index (ICL) and those that increase every six months by Casa Propia . The latter were closed after the update of the law at the end of October last year and until its repeal in December.
“In recent years, up until December, we had contracts that were adjusted every year based on the ICL, which generated an automatic reaction by the owner to try to cover themselves and, consequently, inflate the initial prices a lot. Today, the scheme is more consistent with the Argentine economic reality : more periodic updates that mean that this need for coverage, of putting money into uncertainty, is no longer there ,” says Federico González Rouco, an economist specializing in housing.
The average value of apartments listed for rent in the city of Buenos Aires rose by 3.4% in OctoberHernan Zenteno - The Nation
In this way, the values of the new contracts accumulate an increase of 105.3% in the last 12 months, they advanced below the interannual inflation of 209% in September 2024 compared to the same month in 2023 and below the ICL adjustment ( 227.14% ). In addition, a key fact is that the publication values have accumulated an increase of 57% so far in 2024, almost half of the inflation recorded in the same period (108%), which results in a real drop of 51% .
This is the scenario that real estate market specialists expected with the repeal of the regulations: a context similar to that which occurred between 2013 and 2018, with values that will remain the same month after month , “sometimes they will rise a little and sometimes they will fall, but they are stable numbers,” adds González Rouco.
A key factor in the stable increases in rental listing prices is directly related to the increase in the supply of properties . Since the pandemic, the rental supply has systematically decreased , reaching a historic low in February 2023, until in January 2024 , after the repeal of the rental law, the supply of apartments intended for traditional rental in the city of Buenos Aires increased by 62% compared to the previous month. Therefore, and since then, the growth in supply has moderated . In October, it grew by 2.2% and the volume of supply is 3.1 times higher than that recorded in February 2023 (the historic low).
“Despite the fact that there is a significant supply of apartments for rent, the number of properties available is not sufficient to meet demand. This creates pressure on prices, causing them to rise,” explains Leandro Molina, director of the real estate portal .
As for the values by neighborhood , with reference prices for a two-room apartment of 50 m² , they are ordered as follows:
Palermo is one of the most expensive neighborhoods to rent a property in the city Shutterstock
In this way, there are contracts agreed upon with annual adjustment by ICL, prepared by the Central Bank, under the rental law that govern for a period of three years and continue to be regulated by the previous conditions.
Since it came into force in July 2020, the ICL has been characterized by a constant increase , driven by high inflation. However, since September, a change in trend has been evident , from which the increase in the adjustment due to which rental agreements must increase has slowed down.
For example, in November 2023, the average rent for a two-room apartment in the City of Buenos Aires was $282,389, according to Zonaprop. If that tenant had started the contract on November 1, 2023 under the law , on May 1, 2024, he or she began paying the first updated increase for Casa Propia of $430,476, while in the second update the value will be $725,388.
For example , if a quarterly adjustment was agreed upon , for a rent of $400,000 started in August 2024, which must be adjusted in November, the last index published by Indec is for September 2024, so the value to be paid would be $448,524 .
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Source:
Alquileres: los departamentos que salen al mercado ¿aumentan menos que la inflación?
Un informe relevó la suba de los precios de los departamentos que se ofrecen en las plataformas inmobiliarias
www.lanacion.com.ar
November 05, 2024
A report revealed the rise in prices of apartments offered on real estate platforms
Neighborhood by neighborhood, how much does it cost to rent an apartment?Image Point Fr - Shutterstock
Although the rental listing prices on the main real estate sites continue to rise , the trend of the last two months changed in October : the increase was below inflation . Thus, in the tenth month of the year the average value grew by 3.4% , according to the latest report from Zonaprop , while the Consumer Price Index (CPI) data was 3.5% in September (last data collected by INDEC).
It should be noted that the contracts established according to these values are agreed upon under contractual freedom , as of the repeal of the rental law reflected in Javier Milei's DNU on December 29, 2023; while the contracts under the same are still in force : those that are updated annually by the Lease Contract Index (ICL) and those that increase every six months by Casa Propia . The latter were closed after the update of the law at the end of October last year and until its repeal in December.
“In recent years, up until December, we had contracts that were adjusted every year based on the ICL, which generated an automatic reaction by the owner to try to cover themselves and, consequently, inflate the initial prices a lot. Today, the scheme is more consistent with the Argentine economic reality : more periodic updates that mean that this need for coverage, of putting money into uncertainty, is no longer there ,” says Federico González Rouco, an economist specializing in housing.
The average value of apartments listed for rent in the city of Buenos Aires rose by 3.4% in OctoberHernan Zenteno - The Nation
In this way, the values of the new contracts accumulate an increase of 105.3% in the last 12 months, they advanced below the interannual inflation of 209% in September 2024 compared to the same month in 2023 and below the ICL adjustment ( 227.14% ). In addition, a key fact is that the publication values have accumulated an increase of 57% so far in 2024, almost half of the inflation recorded in the same period (108%), which results in a real drop of 51% .
This is the scenario that real estate market specialists expected with the repeal of the regulations: a context similar to that which occurred between 2013 and 2018, with values that will remain the same month after month , “sometimes they will rise a little and sometimes they will fall, but they are stable numbers,” adds González Rouco.
A key factor in the stable increases in rental listing prices is directly related to the increase in the supply of properties . Since the pandemic, the rental supply has systematically decreased , reaching a historic low in February 2023, until in January 2024 , after the repeal of the rental law, the supply of apartments intended for traditional rental in the city of Buenos Aires increased by 62% compared to the previous month. Therefore, and since then, the growth in supply has moderated . In October, it grew by 2.2% and the volume of supply is 3.1 times higher than that recorded in February 2023 (the historic low).
“Despite the fact that there is a significant supply of apartments for rent, the number of properties available is not sufficient to meet demand. This creates pressure on prices, causing them to rise,” explains Leandro Molina, director of the real estate portal .
Neighborhood by neighborhood: how much does it cost to rent in Buenos Aires
In concrete numbers, the average rent for a studio apartment in August was $440,643 per month, while a one-bedroom apartment costs $524,907 and two-bedroom apartments are offered for an average of $707,201 per month .
As for the values by neighborhood , with reference prices for a two-room apartment of 50 m² , they are ordered as follows:
The most expensive neighborhoods
- Puerto Madero : $987,766
- Nuñez : $592,943
- Palermo : $588,461
- Belgrano : $570,858
- Colegiales : $557,960
The cheapest neighborhoods:
- Lugano : $391,050
- Liniers : $435,474
- Parque Avellaneda : $447,759
- La Boca : $453,877
- Velez Sarsfield : $456,667
Neighborhoods with intermediate prices
- Villa Crespo : $552,956
- Caballito : $517,562
- Parque Chacabuco : $509,846
- Villa General Mitre: $490,866
- Villa Luro : $471,671
Palermo is one of the most expensive neighborhoods to rent a property in the city Shutterstock
How much will rental contracts increase in November?
For the second time this year, three types of rental contracts will be updated at the same time in November : those signed under the Rental Contract Index (ICL) of the now repealed law, those signed with the change in said law under the Casa Propia coefficient and those agreed upon for contractual freedom after the repeal of the rental law . It should be noted that each type of contract was agreed upon in accordance with the regulations in force on the date it was signed.In this way, there are contracts agreed upon with annual adjustment by ICL, prepared by the Central Bank, under the rental law that govern for a period of three years and continue to be regulated by the previous conditions.
Since it came into force in July 2020, the ICL has been characterized by a constant increase , driven by high inflation. However, since September, a change in trend has been evident , from which the increase in the adjustment due to which rental agreements must increase has slowed down.
Adjustment by ICL
In this way, on November 1 , the contracts signed in the same month of 2022 will have a second year-on-year increase of 227.14% , according to the latest ICL update , around 4.5% less than those who had to update in October (237.9%). In concrete numbers, if a tenant pays a rent of $200,000, starting next month and for the next 12 they will have to pay $654,276, while the one who pays $400,000 will pay $1,308,553 per month. A key fact to keep in mind is that the ICL varies on a daily basis , so the increase will depend on the day of the month in which the contract was signed to apply the corresponding adjustment.Adjustment for Own Home
It is worth noting that in November the rental agreements that were agreed upon under the update of the law in 2023 will also be adjusted - from October 17 to December 29, 2023, this index was in force. These are adjusted on a semi-annual basis and based on the Casa Propia coefficient , which in November will be 68.51%.For example, in November 2023, the average rent for a two-room apartment in the City of Buenos Aires was $282,389, according to Zonaprop. If that tenant had started the contract on November 1, 2023 under the law , on May 1, 2024, he or she began paying the first updated increase for Casa Propia of $430,476, while in the second update the value will be $725,388.
Adjustments after the repeal of the rental law
A separate analysis is required for those who closed their rental agreement after the repeal of the regulations, that is, after December 29, 2023. In these cases, the situation is different: freedom was established between the parties when defining the index and the term of the contract and the adjustment. In any case, most of the negotiations were closed with quarterly updates based on the Consumer Price Index (CPI) , which is directly adjusted for inflation : in this case, the increase compared to July will be 12.13%.For example , if a quarterly adjustment was agreed upon , for a rent of $400,000 started in August 2024, which must be adjusted in November, the last index published by Indec is for September 2024, so the value to be paid would be $448,524 .
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