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What could happen to property prices when the exchange rate controls end? - Infobae
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www.infobae.com
March 24, 2025
Possible scenarios for a possible easing of the mortgage rate at a time of real estate boom. Expectations and possible effects on prices, mortgage lending, and market dynamics
By Jose Luis Cieri
The possible end of the exchange rate controls raises expectations in the real estate market: analysts project increased foreign currency inflows and a surge in property demand (Illustrative Image: Infobae)
The possible elimination of the exchange rate controls in Argentina is a central issue in economic analysis. Since the real estate market is one of the sectors most sensitive to the potential measure, various hypotheses arise regarding how it would affect property prices. According to some experts, the impact will depend on factors such as the unification of the exchange rate, the level of confidence in the government, and the evolution of the Central Bank's reserves.
According to some estimates, existing property prices could increase by up to 10% during 2025. Properties under construction, which until recently had been on the rise, have already accumulated increases of more than 20% since March 2024. If inflation remains stable or decreases, construction costs could stabilize and prevent this increase from being passed on to the values of existing homes.
This forecast comes amid a context in which, after five years of decline, the value per square meter in Buenos Aires City rose 8% in 2024, the largest increase in seven years, according to data from the Zonaprop platform. Meanwhile, Mercado Libre and the University of San Andrés reported that prices rose 6.9% in the Buenos Aires Metropolitan Area.
"The scenario will depend on how much money is raised through the agreement with the IMF and the signs of stability provided by the government," explained Mariano Lo Valvo , a real estate expert who operates in the northern part of Buenos Aires.
President Javier Milei raised expectations by setting a date for the closing of the agreement with the IMF , raising the possibility of an early withdrawal. This decision raises questions about its impact on inflation and access to the real estate market.
Lo Valvo maintained that there are differing opinions regarding the impact of the elimination of the exchange rate controls. "The government still faces a negative level of net reserves—close to USD 8 billion—and significant maturities ahead. If the lifting of the controls triggers greater demand for foreign currency, the exchange rate is likely to adjust upward due to a natural market effect," he noted.
In this regard, he added that some analysts believe the president will choose to postpone the measure until he has sufficient support from the Central Bank, which would help contain a sharp jump in the dollar's value.
Darío Durand , of the developer DDM Construcciones, noted that if a sudden devaluation is avoided, "property prices will gradually increase." He also indicated that the lifting of the currency controls "will boost the inflow of foreign currency, facilitate access to the dollar, and, in the long term, stimulate investment in the sector."
José Rozados , of Reporte Inmobiliario, recommended not overestimating the direct effect of a measure of this type. “A single measure never causes an immediate movement in prices,” he stated. Even if a significant devaluation were to occur, he added, the impact would be limited. “The current outlook is different from that of 2001; the market operates with different dynamics,” he explained.
Another key factor is financing, which could be expanded if the restrictions are lifted. Fernando Álvarez de Celis , of the Tejido Urbano Foundation, stated that the elimination "would allow banks to access more resources and grant larger mortgage loans, which would boost demand for properties."
Building costs are expected to stabilize in the short and medium term, which would prevent the increase from being passed on to the prices of homes under construction (Illustrative Image Infobae)
Furthermore, he explained, "real estate values tend to rise in contexts without exchange rate restrictions, as these situations attract foreign investment and boost the economy."
The sector warned that a significant stock of unsold properties persists, which could mitigate immediate price increases. "There are currently more than 110,000 properties for sale, according to Zonaprop, Cabaprop, Mercado Libre, Argenprop, and other portals, which shows that supply continues to outstrip demand. Therefore, I don't see a significant increase in prices in the short term," Durand added.
However, Lo Valvo warned that mistakes must not be repeated. “When the exchange rate controls were lifted, people quickly absorbed the available funds, which put pressure on the dollar and the peso. Without sufficient reserves or without strengthening confidence, the situation could deteriorate,” he warned.
The evolution of the real estate market will thus depend on multiple factors: exchange rate stability, access to financing, the ability to generate foreign currency, and signs of predictability. While there are positive expectations, specialists agree that avoiding setbacks will be essential to sustaining the projected growth.
This trend has driven new strategies in the sector. Real estate development and investment in areas with high potential for appreciation have gained prominence. “In times of greatest uncertainty, the best opportunities also arise. When the market was at its worst, some developers decided to invest in long-term projects, anticipating a recovery in the sector,” concluded Federico Larroca Mendizábal , an architect specializing in urban planning and member of Grupo Desarrollador 1880.
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Qué podría pasar con los precios de las propiedades cuando termine el cepo cambiario
Posibles escenarios ante una eventual flexibilización en un momento de despegue inmobiliario. Expectativas y posibles efectos sobre cotizaciones, crédito hipotecario y dinámica del mercado
www.infobae.com
March 24, 2025
Possible scenarios for a possible easing of the mortgage rate at a time of real estate boom. Expectations and possible effects on prices, mortgage lending, and market dynamics
By Jose Luis Cieri
The possible end of the exchange rate controls raises expectations in the real estate market: analysts project increased foreign currency inflows and a surge in property demand (Illustrative Image: Infobae)
The possible elimination of the exchange rate controls in Argentina is a central issue in economic analysis. Since the real estate market is one of the sectors most sensitive to the potential measure, various hypotheses arise regarding how it would affect property prices. According to some experts, the impact will depend on factors such as the unification of the exchange rate, the level of confidence in the government, and the evolution of the Central Bank's reserves.
According to some estimates, existing property prices could increase by up to 10% during 2025. Properties under construction, which until recently had been on the rise, have already accumulated increases of more than 20% since March 2024. If inflation remains stable or decreases, construction costs could stabilize and prevent this increase from being passed on to the values of existing homes.
This forecast comes amid a context in which, after five years of decline, the value per square meter in Buenos Aires City rose 8% in 2024, the largest increase in seven years, according to data from the Zonaprop platform. Meanwhile, Mercado Libre and the University of San Andrés reported that prices rose 6.9% in the Buenos Aires Metropolitan Area.
"The scenario will depend on how much money is raised through the agreement with the IMF and the signs of stability provided by the government," explained Mariano Lo Valvo , a real estate expert who operates in the northern part of Buenos Aires.
President Javier Milei raised expectations by setting a date for the closing of the agreement with the IMF , raising the possibility of an early withdrawal. This decision raises questions about its impact on inflation and access to the real estate market.
Lo Valvo maintained that there are differing opinions regarding the impact of the elimination of the exchange rate controls. "The government still faces a negative level of net reserves—close to USD 8 billion—and significant maturities ahead. If the lifting of the controls triggers greater demand for foreign currency, the exchange rate is likely to adjust upward due to a natural market effect," he noted.
In this regard, he added that some analysts believe the president will choose to postpone the measure until he has sufficient support from the Central Bank, which would help contain a sharp jump in the dollar's value.
Effects on property prices
Analysts agree that the impact will not be immediate: they anticipate different effects in the short and medium term.Darío Durand , of the developer DDM Construcciones, noted that if a sudden devaluation is avoided, "property prices will gradually increase." He also indicated that the lifting of the currency controls "will boost the inflow of foreign currency, facilitate access to the dollar, and, in the long term, stimulate investment in the sector."
José Rozados , of Reporte Inmobiliario, recommended not overestimating the direct effect of a measure of this type. “A single measure never causes an immediate movement in prices,” he stated. Even if a significant devaluation were to occur, he added, the impact would be limited. “The current outlook is different from that of 2001; the market operates with different dynamics,” he explained.
Another key factor is financing, which could be expanded if the restrictions are lifted. Fernando Álvarez de Celis , of the Tejido Urbano Foundation, stated that the elimination "would allow banks to access more resources and grant larger mortgage loans, which would boost demand for properties."
Building costs are expected to stabilize in the short and medium term, which would prevent the increase from being passed on to the prices of homes under construction (Illustrative Image Infobae)
Furthermore, he explained, "real estate values tend to rise in contexts without exchange rate restrictions, as these situations attract foreign investment and boost the economy."
Impact on market dynamics
The real estate market could see significant changes after the easing of the exchange rate. Some specialists predict that sectors that had been on hold will change their expectations and generate more buying and selling activity. "The exchange rate restriction distorts the market and complicates transactions. Its elimination streamlines and makes transactions more transparent, especially by allowing us to operate with a single exchange rate," Durand said.The sector warned that a significant stock of unsold properties persists, which could mitigate immediate price increases. "There are currently more than 110,000 properties for sale, according to Zonaprop, Cabaprop, Mercado Libre, Argenprop, and other portals, which shows that supply continues to outstrip demand. Therefore, I don't see a significant increase in prices in the short term," Durand added.
Don't make mistakes
Several key players recalled what happened after the end of the currency controls during Mauricio Macri 's administration in late 2015. At that time, the combination of new mortgage credit lines, such as UVA loans, led to a surge in demand. In fact, according to data from the Notaries Association of the City of Buenos Aires, some 63,428 properties were sold in 2017, and around 55,698 in 2018. In 2024, the figure for the sale exceeded 54,000, so it was close.However, Lo Valvo warned that mistakes must not be repeated. “When the exchange rate controls were lifted, people quickly absorbed the available funds, which put pressure on the dollar and the peso. Without sufficient reserves or without strengthening confidence, the situation could deteriorate,” he warned.
The evolution of the real estate market will thus depend on multiple factors: exchange rate stability, access to financing, the ability to generate foreign currency, and signs of predictability. While there are positive expectations, specialists agree that avoiding setbacks will be essential to sustaining the projected growth.
This trend has driven new strategies in the sector. Real estate development and investment in areas with high potential for appreciation have gained prominence. “In times of greatest uncertainty, the best opportunities also arise. When the market was at its worst, some developers decided to invest in long-term projects, anticipating a recovery in the sector,” concluded Federico Larroca Mendizábal , an architect specializing in urban planning and member of Grupo Desarrollador 1880.
www.buysellba.com
