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Trapped: rent for a studio apartment is equivalent to 70% of the average salary of younger workers - Infobae
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www.infobae.com
August 26, 2024
This is what emerges from a private report that reveals the need to meet the costs of a home. Salaries that are not fully recovered also have an impact. Renting a two-room apartment represents 48% of the sum of two salaries of young people between 18 and 24 years old.
By Jose Luis Cieri
A young man carries the weight of a house on his shoulders, representing the challenges of high rents, rising living costs and economic pressure (Illustrative image Infobae)
A private analysis confirmed the difficulties faced by young workers between 18 and 24 years of age when renting a home in the City of Buenos Aires. According to this first report, young people with formal employment spend 69.6% of their salary on renting a studio apartment alone, a percentage that far exceeds the international accessibility threshold of 30% (ratio between income and rent).
The work also confirmed that reserving a studio apartment increased by 11.9 percentage points compared to the 58% required in the first quarter of 2023. To make a new contract, more than $1,000,000 is required both in CABA and in the province of Buenos Aires .
The situation is not much better for those who live together: renting a one-bedroom apartment represents 48% of the sum of two young people's salaries, an increase of 9.9 points from the 38.1% recorded a year earlier.
These data were collected through the Emancipation Index (IDE) that the Institute for Future Urban Challenges (IDUF) recently began to carry out .
Source: Emancipation Index (IDE) of the Institute for Future Urban Challenges (IDUF)
Max Beraud , together with Gabriela Tavella , IDUF researchers and IDE coordinators, told Infobae that, if everything were to go along the normal paths, it is considered that 70% of the salary would be sufficient to cover the other expenses that a person has for the development of his or her daily life. If other expenses related to housing are added to this rent-salary ratio, such as utilities and service costs, the result of the Emancipation Index would be even less favorable.”
Expenses are a negative point because they have recently risen more than rents and, in several cases, represent up to 50% of the cost of what is paid for the rental of the home.
The increase in the weight of rent on wages, observed in the first quarter of 2024 compared to the same period of the previous year, reflects the trajectory of the index during 2023. In those months, there was a strong growth in the weight of rent relative to wages.
“Although the rent-to-salary ratio improved in 2024, it failed to reverse the previous deterioration process. For example, in the first quarter of 2023, those looking to rent a one-bedroom apartment had 62 percent of their remaining salary available. In the first quarter of 2024, that figure dropped to 52%,” Tavella said.
Source: Emancipation Index (IDE) of the Institute for Future Urban Challenges (IDUF)
The report also presents a historical series dating back to 2018, the aim of which is to measure the possibilities of young people with formal employment to access and maintain rental housing in the city.
The results show that rent increases far exceed young people's salaries, severely limiting their savings capacity and quality of life.
Source: Emancipation Index (IDE) of the Institute for Future Urban Challenges (IDUF)
This increase in the percentage of wages spent on rent is pushing many people to look for housing alternatives outside the city or to share accommodation to reduce costs.
“Some municipalities have seen these expectations increase due to the boom in temporary tourist rentals. Some have received real estate investments that seek to increase profitability by withdrawing properties from the market while waiting for better conditions,” said Beraud.
Source: Emancipation Index (IDE) of the Institute for Future Urban Challenges (IDUF)
In the third quarter of 2023, the period with the worst relationship between salaries and rents in the period analyzed, communes 13 (Belgrano, Núñez and Colegiales), 14 (Palermo) and 2 (Recoleta) were the ones that offered the least possibilities of emancipation for young people looking to rent a two-room apartment.
In contrast, commune 7 (Flores and Parque Chacabuco), commune 3 (Balvanera and San Cristóbal) and commune 10 (Villa Real, Monte Castro, Versalles, Floresta, Vélez Sarsfield and Villa Luro) offered better opportunities.
Considering the situation of a salary for renting a studio apartment, the trends are maintained although with a more compromised relationship. This does not imply that there are no emancipated young people in these communities.
Tavella added: “Average salaries are not enough to pay rent and other strategies are required, such as living together or receiving financial help from the family of origin.”
There are tools that have not yet been tested in Argentina, analysts report, but which have proven effective in other countries around the world. One example is the creation of a bank of public rental housing (such as Denmark and the Netherlands, among others), with regulated values, creating a protected market for specific sectors, such as young people. This would represent a beneficial intervention, without generating new stress in the private rental market.
As regards private supply, until the public housing bank has sufficient volume to influence rental market prices, specific mechanisms are needed to temporarily support the demand of young people.
“Some alternatives could be free surety bonds through public banks, subsidized loans for initial expenses and payment of services, among others,” concluded Socías.
www.buysellba.com
Source:
Atrapados: el alquiler de un monoambiente equivale al 70% del salario promedio de los trabajadores más jóvenes
Así lo confirmó un informe privado que revela la exigencia de afrontar los costos de un hogar. Además las expensas también impactan y sueldos que aún no se recuperan del todo. El alquiler de un departamento de dos ambientes implica el 48% de la suma de dos salarios
www.infobae.com
August 26, 2024
This is what emerges from a private report that reveals the need to meet the costs of a home. Salaries that are not fully recovered also have an impact. Renting a two-room apartment represents 48% of the sum of two salaries of young people between 18 and 24 years old.
By Jose Luis Cieri
A young man carries the weight of a house on his shoulders, representing the challenges of high rents, rising living costs and economic pressure (Illustrative image Infobae)
A private analysis confirmed the difficulties faced by young workers between 18 and 24 years of age when renting a home in the City of Buenos Aires. According to this first report, young people with formal employment spend 69.6% of their salary on renting a studio apartment alone, a percentage that far exceeds the international accessibility threshold of 30% (ratio between income and rent).
The work also confirmed that reserving a studio apartment increased by 11.9 percentage points compared to the 58% required in the first quarter of 2023. To make a new contract, more than $1,000,000 is required both in CABA and in the province of Buenos Aires .
The situation is not much better for those who live together: renting a one-bedroom apartment represents 48% of the sum of two young people's salaries, an increase of 9.9 points from the 38.1% recorded a year earlier.
These data were collected through the Emancipation Index (IDE) that the Institute for Future Urban Challenges (IDUF) recently began to carry out .
Source: Emancipation Index (IDE) of the Institute for Future Urban Challenges (IDUF)
Max Beraud , together with Gabriela Tavella , IDUF researchers and IDE coordinators, told Infobae that, if everything were to go along the normal paths, it is considered that 70% of the salary would be sufficient to cover the other expenses that a person has for the development of his or her daily life. If other expenses related to housing are added to this rent-salary ratio, such as utilities and service costs, the result of the Emancipation Index would be even less favorable.”
Expenses are a negative point because they have recently risen more than rents and, in several cases, represent up to 50% of the cost of what is paid for the rental of the home.
The increase in the weight of rent on wages, observed in the first quarter of 2024 compared to the same period of the previous year, reflects the trajectory of the index during 2023. In those months, there was a strong growth in the weight of rent relative to wages.
“Although the rent-to-salary ratio improved in 2024, it failed to reverse the previous deterioration process. For example, in the first quarter of 2023, those looking to rent a one-bedroom apartment had 62 percent of their remaining salary available. In the first quarter of 2024, that figure dropped to 52%,” Tavella said.
Source: Emancipation Index (IDE) of the Institute for Future Urban Challenges (IDUF)
In values
During the first quarter of the year, the average rental cost in CABA rose to $274,482 for a studio apartment and $378,519 for a two-room apartment. These values illustrate a strong upward trend, which erodes the purchasing power of young workers.The report also presents a historical series dating back to 2018, the aim of which is to measure the possibilities of young people with formal employment to access and maintain rental housing in the city.
The results show that rent increases far exceed young people's salaries, severely limiting their savings capacity and quality of life.
Source: Emancipation Index (IDE) of the Institute for Future Urban Challenges (IDUF)
This increase in the percentage of wages spent on rent is pushing many people to look for housing alternatives outside the city or to share accommodation to reduce costs.
By communes
The study also explored, in general terms, the differences between the municipalities of Buenos Aires with respect to expectations of rental profitability.“Some municipalities have seen these expectations increase due to the boom in temporary tourist rentals. Some have received real estate investments that seek to increase profitability by withdrawing properties from the market while waiting for better conditions,” said Beraud.
Source: Emancipation Index (IDE) of the Institute for Future Urban Challenges (IDUF)
In the third quarter of 2023, the period with the worst relationship between salaries and rents in the period analyzed, communes 13 (Belgrano, Núñez and Colegiales), 14 (Palermo) and 2 (Recoleta) were the ones that offered the least possibilities of emancipation for young people looking to rent a two-room apartment.
In contrast, commune 7 (Flores and Parque Chacabuco), commune 3 (Balvanera and San Cristóbal) and commune 10 (Villa Real, Monte Castro, Versalles, Floresta, Vélez Sarsfield and Villa Luro) offered better opportunities.
Considering the situation of a salary for renting a studio apartment, the trends are maintained although with a more compromised relationship. This does not imply that there are no emancipated young people in these communities.
Tavella added: “Average salaries are not enough to pay rent and other strategies are required, such as living together or receiving financial help from the family of origin.”
Proposals to improve access to housing
The experience of the Rental Law was bad. “However, that does not mean that the free market produces optimal balances and that intervention is not necessary. In the most developed cities in the world, strong and constant state intervention strategies are implemented to improve affordability,” said Manuel Socías , director of IDUF.There are tools that have not yet been tested in Argentina, analysts report, but which have proven effective in other countries around the world. One example is the creation of a bank of public rental housing (such as Denmark and the Netherlands, among others), with regulated values, creating a protected market for specific sectors, such as young people. This would represent a beneficial intervention, without generating new stress in the private rental market.
As regards private supply, until the public housing bank has sufficient volume to influence rental market prices, specific mechanisms are needed to temporarily support the demand of young people.
“Some alternatives could be free surety bonds through public banks, subsidized loans for initial expenses and payment of services, among others,” concluded Socías.
www.buysellba.com
