BuySellBA
Administrator
Rentals: They reveal the real increase in contracts above inflation - La Nacion Propiedades
Source:
Alquileres: revelan cuál fue el aumento real de los contratos por sobre la inflación
Los contratos de los alquileres se dispararon por sobre la inflación según el último informe de ZonaProp
www.lanacion.com.ar
January 16, 2024
Rental contracts soared above inflation according to the latest ZonaProp report
By Candelaria Reinoso Taccone
Rentals: in 2023 contracts soared above inflation
A few days ago, inflation in 2023 was revealed: the Consumer Price Index (CPI) reached 211.4%, more than double the 94.8% accumulated in 2022. In addition, December inflation reached its maximum in 33 years : an increase of 25.5%, double compared to the previous month (12.8%), according to data collected by the National Institute of Statistics and Censuses (INDEC).
These macro data impact all sectors of the economy and real estate is no exception. In fact, the cost of renting an apartment in the city of Buenos Aires experienced an annual increase of 260% during 2023 (2.65 times more than in 2022), with a monthly variation of 18.6% , according to a survey carried out in based on the notices published on the Zonaprop real estate portal . For reference, the same two-bedroom unit that was rented for almost $40,000 in July 2021 is now being offered for almost $335,000 per month.
In the city of Buenos Aires, the cost of renting an apartment experienced an annual increase of 260%, 2.65 times more than in 2022.
In other parts of Greater Buenos Aires, such as the north and west-south areas, rents reached annual increases of 232% and 230%, respectively.
But the revealing fact is that these increases exceeded the general inflation rate, setting a historical record.
During the previous two years, the rent of a property located in CABA had only experienced increases slightly above inflation. In 2021, the increase in contracts was 53%, just two points above the annual inflation of that year, which was 51%. In 2022, the difference widened to three points, with inflation of 95% and an increase in rents of around 98%.
In CABA, in 2021 rents exceeded inflation by just two points, similar to 2022, when the difference widened to three points.
In numbers, a 40 m² studio apartment located in the Federal Capital is already rented for $280,260 per month, while a 50 m² two-room apartment reaches $334,888. Meanwhile, a three-room, 70 m² property has a monthly price of $463,301. Meanwhile, a two-room apartment in the northern area costs $289,764 per month , while a three-room apartment is already rented for $438,584 per month.
How much rents increased in 2023
However, when analyzing how much more expensive it became to rent an apartment during 2023, the inflation number must be broken down and thus obtain the real increase in the prices of rental contracts. The result provides a more precise and stripped-down view of the inflationary effects, thus revealing the true economic impact on the pockets of those seeking housing.In the case of a department located in the federal capital, the real increase was 48.6%. In contrast, rents in CABA during 2021 and 2022 would have increased by 2% and 3% in real terms. While in rents in the northern and western and southern areas, the real increases were 20.6% and 18.6% , respectively.
Renting a 2-room apartment in the northern area costs $289,764 per month, registering a new record.
The average rental price of a 2-room apartment in the southern area is $208,087 per month.
Why rents rise above inflation
Verónica Balayan, owner of Maure Inmobiliaria, and one of the leaders of the sector who follows the market minute by minute, explains that this increase is attributed to three main factors: inflation, the shortage of units on offer and an unfavorable regulatory framework for the market that extended between July 2020 and the end of 2023.The contracts signed under the law passed during the pandemic were updated annually, taking as a reference the Central Bank's Lease Contract Index (ICL) . This index, however, shows a lag with respect to inflation and is calculated two months late at the time of carrying out the adjustment . A similar situation occurs in contracts signed between October 19 and December 29, a period in which the law was modified, incorporating changes, such as the adoption of the Casa Propia index and semiannual adjustments.
To counteract the loss of value, many homeowners tried to get ahead of inflation by adjusting prices, which raised the barrier to entry and made it more difficult to access housing.
Federico González Rouco, an economist specialized in the real estate market and part of Herán Lacunza's small desk at his consulting firm Empiria, clarifies that in these cases the increases always lag behind the inflation rate. “They are running behind, especially with Casa Propia , since it takes time to absorb the inflation number and has a limit when considering the increase in salaries,” mentions the specialist.
Taking into account the inflationary outlook, this dynamic generated a loss of profitability for owners and discouraged the consideration of rentals as a business.
To counteract the loss of value, many tried to get ahead of inflation by adjusting prices, which raised the barrier to entry and made it more difficult to access housing. As a result, the market price of the few traditional rentals available continues to increase monthly above the general price index.
How much will rents increase in January and February
Bitcoin rental
Since last December, President Javier Milei repealed the Rental Law through a Decree of Necessity and Urgency (DNU ) , allowing the parties to agree to update contracts based on inflation, salary evolution or even the price of a liter of gasoline.
However, contracts prior to the DNU will maintain the agreed terms , especially those signed under the 2020 law, which will continue with annual updates until their expiration, regulated by the ICL (index that crosses salaries and inflation), during the 36 months of Contract period.
Those experiencing an annual rent increase in January could face increases of up to 145% by the end of the month.
González Rouco anticipates that those who update contracts in January will suffer increases of up to 145% towards the end of the month . This range varies depending on the specific day the increase is applied. In February, increases of 160% are expected , followed by a 190% increase in March . These forecasts occur in the context of an economy that, for the third month of 2024, projects an increase in interannual inflation of more than 200%.
On the other hand, those who have signed a rental contract between October 19 and December 29 will experience their first semi-annual update, at the earliest, next April . This update will be linked to the Own Home Index instead of the ICL, which is used by the Ministry of Territorial Development and National Habitat in the Procrear II plans. The aforementioned formula takes into account the lowest index between salary variation and inflation in the last year.
www.buysellba.com
