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Rentals: Two Reasons Why Apartment Seekers Must Hurry - La Nacion Propiedades
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Alquileres: las dos razones por las que quien busca un departamento tiene que apurarse
Los números muestran un posible cambio de tendencia en los precios y en la oferta
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September 04, 2024
The numbers show a possible change in trend in prices and supply
By Candle Contreras
In August, rental listing prices on major real estate sites posted increases above the CPI Shutterstock
After several months of slowdown, the rental market recorded , for the first time since February 2024, a significant increase in apartment listing prices in August, outpacing inflation : prices in August rose 4.5% compared to the previous month , according to the latest data from Zonaprop, while inflation was 4% in July (the last month surveyed).
This increase not only represents the largest rise since the beginning of the year , but also reflects a slowdown in the decline in prices for the second consecutive month . In July, the increase was 3.3%; in June, 2.2%; in May, 2.3%; in April, 1.9%; in March, 1.3% and in February, 2.9%.
“The increase in the price of rents is related to the evolution of inflation . Although the increase in August is tenths above the inflation calculated by the REM (Market Expectations Survey), currently the price of new contracts runs at the same pace as the data of the CPI (Consumer Price Index)”, says Leandro Molina, director of the real estate portal. “In addition, the offer has not yet validated the demand , which impacts on the values ”, he adds.
In search of balance
“ The rental market is still looking for a balance and so far this year the price of listings has fallen in real terms,” says Soledad Balayan, owner of Maure Inmobiliaria.
Listing prices for apartments for rent rose 4.5% in AugustImage Point Fr - Shutterstock
In this way, the values of the new contracts accumulate an increase of 144.3% in the last 12 months, they advanced below inflation (263.4% in July 2024, the last measurement) and below the ICL adjustment (244.5%) so far. These agreements are now established in accordance with contractual freedom, based on 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 . These were closed after the law was updated at the end of October last year.
Federico González Rouco, an economist specializing in housing, referred to the latter: “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, greatly inflate the initial prices. Today, the scheme is more consistent with the Argentine economic reality : more periodic updates mean that this need for coverage, of putting money into uncertainty, is no longer there .”
The market seems to have reached an equilibrium , with a fall in risk for owners and barriers to entry. “The key is that it has already dropped by more than 40%, so it will not go down forever, just like the supply of rental apartments,” says Rouco. This scenario is what specialists expected : a context similar to that which occurred between 2013 and 2018, with values that will remain the same month after month , “sometimes they will go up a little and sometimes they will go down, but they are stable numbers,” adds the economist.
Why the supply of apartments decreased in August
After a sustained increase in the supply of rentals in the City of Buenos Aires (CABA) following the readjustment of the market after the repeal of the law at the end of last year , a report reveals a change in trend: in August, the supply of apartments for rent decreased by 5.87% compared to the previous month, marking a decline after seven months , according to data provided by the Real Estate Association.www.buysellba.com
The survey indicates that, since the entry into force of DNU 70/2023, which repealed the Rental Law on December 29, 2023, the rental supply in CABA experienced a significant growth of 177.91% in the first seven months of the year . This increase was driven by the expectation of changes in the conditions of the contracts, which led many owners to put back on the market properties that had been withdrawn .
What does this decrease mean? Analysts agree that this reduction is due to a stabilization of the real estate market in which owners adapted to the new rules established by the DNU and returned to turning their units into rentals.
Furthermore, analysts do not foresee a scenario with neighbourhoods where the supply of apartments is almost non-existent, as occurred in the past when the rental law was in force at its most critical point. Instead, they consider that this decline is a natural consequence of the market readjustment and that the apartments on offer are being rented .
How much does rent cost in the city of Buenos Aires?
In concrete numbers, the average rent for a studio apartment in August was $407,026 per month, while a one-bedroom apartment costs $485,881 and two-bedroom apartments are offered on average at $656,551 per month . According to these values, it can be seen that so far in 2024 the price has accumulated an increase of 45% , below inflation, resulting in a real drop of 49% .
Rental listing prices by type in August
As for the prices by neighborhood, with reference prices for a two-room apartment: Puerto Madero continues as the most expensive offer to rent in the City of Buenos Aires, with an average price of $1,019,112 per month . It is followed by Palermo $549,806 and Núñez $537,217 . While on the other hand, Lugano, Floresta and Parque Avellaneda are the most affordable options on the market, with prices around $320,165, $409,994 and $413,039 per month , respectively.
The neighborhoods with the average prices in the city are :
- Parque Chas: $506,228
- Paternal: $478,392
- Villa Devoto: $464,595
- Villa Luro: $455,760
- Monte Castro: $439,878
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