Real Estate News When will property be cheap in Buenos Aires?

[PoulCess]

It appears that a substantial number of loans were extended in the past few years to stimulate property demand. However, in the face of recent austerity measures, anticipated unemployment, and a general decrease in wages when measured in dollars, there arises a pertinent question: When can we expect a decline in housing prices? Are there potential risks of defaults leading to forced sales?

As economic conditions evolve, predictions become crucial. The real estate market's resilience in the wake of these challenges is uncertain, and the potential consequences on property values, default rates, and forced sales are areas of concern that merit careful consideration.

 

[PhelipCer]

It appears that a substantial number of loans were extended in the past few years to stimulate property demand. However, in the face of recent austerity measures, anticipated unemployment, and a general decrease in wages when measured in dollars, there arises a pertinent question: When can we expect a decline in housing prices? Are there potential risks of defaults leading to forced sales?

As economic conditions evolve, predictions become crucial. The real estate market's resilience in the wake of these challenges is uncertain, and the potential consequences on property values, default rates, and forced sales are areas of concern that merit careful consideration.

Having spent a decade working as a realtor in Buenos Aires, I am now in a semi-retired phase. I've observed a notable shift in property prices, witnessing a minimum decline of 15% from their peak in January 2018. While some realtors may paint a rosy picture of market stability, my extensive contacts within the real estate community reveal a stark reality – sales have plummeted by a staggering 80% since January.

The preceding years experienced a real estate bubble, fueled by unfavorable economic fundamentals. Despite this, the availability of cheap credit and an overvalued peso made taking out home loans an enticing proposition. In January, nearly 40% of all sales involved credit, with 60% of transactions for properties below 150 thousand, artificially inflating prices across the board. Now, regret looms for those who didn't sell during the peak, as the market has ground to a complete standstill, with only exclusive or reasonably priced properties finding buyers.

Through my market studies and analysis of supply and demand dynamics, I discern a perfect storm brewing. The market is flooded with rental properties hitting the sales market due to meager returns, with most properties yielding less than 2% annually. Notably, popular property portal Zonaprop has witnessed a twofold increase in listings compared to last year, indicating an imbalance with high supply and low demand. This situation is likely to worsen, paving the way for substantial price adjustments in US dollars for Buenos Aires properties.

Examining global parallels, cities in crisis have witnessed significant property value declines, such as Athens, Greece, which lost over 50% of its value since 2006. Argentina, grappling with the world's worst-performing currency (excluding the Venezuelan bolivar), faces predictions of the peso hitting 70 by June 2019. This scenario, fueled by recent massive devaluations, could lead to a cascade of desperate sellers eager to secure dollars. While fear currently prevails in the market, the next stage, marked by desperation, may be imminent.

Considering the prevailing circumstances, my personal recommendation leans toward caution. I would advise against purchasing property in Buenos Aires unless an exceptionally favorable deal presents itself. A prudent approach would be to wait for a year and observe how the market unfolds before making any significant investment decisions.

 

[bwyonsea]

In 2002 crisis you were able to buy real estate with over 50% off.

 

[bwyonsea]

Now the market sucks. The apartment where I live cost 175 K. The one in the upper floor is for sale and they ask 300 K. So, even a 20% off is too expensive.

 

[PhelipCer]

Now the market sucks. The apartment where I live cost 175 K. The one in the upper floor is for sale and they ask 300 K. So, even a 20% off is too expensive.

Real estate in Buenos Aires has traditionally carried a hefty price tag, especially considering the prevalent use of cash in transactions, high buying and selling costs, and the common lack of renovations in most apartments over the last 30 years. My initial property acquisition, priced at approximately US$ 800 per square meter in Palermo Soho, drew skepticism from some as a foreign buyer. However, despite the initial doubts, it proved to be a lucrative investment, as Palermo Soho experienced a proportionally higher per-meter price increase than any other neighborhood over the past decade.

I find the current fascination with PHS (Preservation Historical Sites) perplexing, primarily due to the perception of avoiding expenses. In many cases, the price per meter for PHS units surpasses that of regular apartments. Furthermore, these buildings often suffer from poor maintenance and security concerns. Personally, I prefer investing in category buildings with 24-hour security, valuing the importance of a good view and ample natural light in all rooms. These features not only enhance my living experience but also prove beneficial when it comes time to resell.

 

[earlyretirement]

Prices will NEVER fall to the levels they did after the Corralito. That was a once in a lifetime chance to buy premium real estate so cheap. People really learned from that lesson that the ONLY thing safe to invest in Argentina is land and bricks. It's the one true investment in Argentina.

I wouldn't buy at these prices. Even 25% fall still would be expensive. There are boom and bust cycles during their recession. The one thing I'm 100% sure is if there is a huge crash in prices, you'll have investors scooping up the real estate there.

 

[PoulCess]

People may be learning that nothing is safe to invest in here in argentina. As a result, the money doesn't go to AR real estate, it leaves offshore to a miami bank account.

 

[earlyretirement]

Over the long haul, real estate has been a pretty good investment in Argentina. Mark my word, if prices absolutely crashed as it did after the Correlito, you would see people swooping up properties quickly. I don't ever see prices going that low again in Buenos Aires. Kind of like real estate prices in the USA in 2011. In many cities around the USA you couldn't build for anywhere near what many properties were selling for.

Yes, there will be some owners selling because they have to sell but remember by and large, most that own real estate in the Capital own it free and clear and won't be forced to sell. However, definitely as the crises gets worse (which it most certainly will) prices will fall. Not sure how much but they will definitely fall.

 

[PhelipCer]

Having worked as a real estate agent in Buenos Aires for over a decade, I can attest that the current market conditions are more challenging than ever, surpassing even the difficulties during Christina's cepo cambiaria era. Based on my calculations, property sales have plummeted by a staggering 60% in recent months, with only a handful of properties finding buyers. This sudden and substantial decline is a cause for serious concern, especially considering the economic situation in Argentina, which is poised to exacerbate the situation.

The current state of credit applications is nearly nonexistent, primarily due to stringent requirements where individuals must demonstrate a monthly ingreso of close to 90,000 pesos to qualify for a basic loan. This criterion raises the pertinent question: Who earns such an income? Reflecting on the real estate market from 2015 to 2017, it's evident that it thrived on a bubble fueled by a depreciated peso and easy credit. Since 2017, I've been cautioning about this trend, often labeled as a doomsayer. However, those who heeded my advice made substantial profits by selling at the market's peak in January 2018.

The situation is even more dire in the provinces, where real estate transactions have seen a staggering decline of up to 90% in many cities. The overall outlook for the real estate market is undoubtedly challenging, requiring careful consideration and strategic decisions in these uncertain times.

https://www.elsol.com.ar/advierten-una-caida-de-90-en-la-compraventa-de-propiedades-en-mendoza

 

[PhelipCer]

Having worked as a real estate agent in Buenos Aires for over a decade, I can attest that the current market conditions are more challenging than ever, surpassing even the difficulties during Christina's cepo cambiaria era. Based on my calculations, property sales have plummeted by a staggering 60% in recent months, with only a handful of properties finding buyers. This sudden and substantial decline is a cause for serious concern, especially considering the economic situation in Argentina, which is poised to exacerbate the situation.

The current state of credit applications is nearly nonexistent, primarily due to stringent requirements where individuals must demonstrate a monthly ingreso of close to 90,000 pesos to qualify for a basic loan. This criterion raises the pertinent question: Who earns such an income? Reflecting on the real estate market from 2015 to 2017, it's evident that it thrived on a bubble fueled by a depreciated peso and easy credit. Since 2017, I've been cautioning about this trend, often labeled as a doomsayer. However, those who heeded my advice made substantial profits by selling at the market's peak in January 2018.

The situation is even more dire in the provinces, where real estate transactions have seen a staggering decline of up to 90% in many cities. The overall outlook for the real estate market is undoubtedly challenging, requiring careful consideration and strategic decisions in these uncertain times.

https://www.elsol.com.ar/advierten-una-caida-de-90-en-la-compraventa-de-propiedades-en-mendoza

Prices can crash as proven by many real estate markets over the last 10 years . Athens Greece has the cheapest property price per metre in Continental Europe and has fallen 50% ( and this with a strong currency) . Venezuela with a similar currency to Argentina has fallen 90% . Caracas just 10 years ago was the dearest city in Latin America for property with prices around US$ 4,000 a metre in top neighbourhoods . Now you can buy a property for less than US$ 500 a metre or less in middle class neighbourhoods.

 

[earlyretirement]

I don't think many people are living in a bubble. Almost everyone I know has acknowledged that prices have been very high the past few years. Most of my friends have sold several properties the past year or two while prices are high. I don't think anyone is saying that property prices won't go down over the short-term in Argentina. Property prices during a severe recession go down just about anywhere in the world.

I wouldn't say Buenos Aires is a city where most people speculate. All my friends that own in Buenos Aires bought for the long haul. While they acknowledge that prices will probably dip over the short-term, they aren't going to panic sell their paid off properties that they own 100% free and clear with no mortgages.

If you want to talk about bubbles you can talk about the USA as prices in many cities are past peak bubble prices from before the US recession. And most people are leveraged to the hilt. In Argentina almost no one is leveraged. But I definitely agree with you Perry that prices will go down. But that's totally normal during a severe recession.

I do agree if you aren't planning to hold for the long haul then it's better to sell now while you can as prices are still relatively high. But prices are high and peak level prices in many areas around the world. Definitely owning here isn't for the faint of heart or someone expecting big returns.

 

[bwyonsea]

There is a bubble for sure. I did assess the department Where I live and my real estate agent said it cost 175.000 while the owner wants 350.000, exatly double.

 

[earlyretirement]

There is a bubble for sure. I did assess the department Where I live and my real estate agent said it cost 175.000 while the owner wants 350.000, exatly double.

Where is the apartment at? How big is it? What floor? Amenities in the building?

 

[bwyonsea]

Where is the apartment at? How big is it? What floor? Amenities in the building?

Uruguay and Paraguay, Recoleta. 2nd floor. 100 mts2. Central heating. 70 years old needing renovation (new) kitchen and bathrooms.

 

[earlyretirement]

Uruguay and Paraguay, Recoleta. 2nd floor. 100 mts2. Central heating. 70 years old needing renovation (new) kitchen and bathrooms.

Yeah, that's pricey if it needs renovations. I sold a totally renovated apartment about 85 sq. meters in Recoleta last year that was in pristine condition and didn't need anything done. I sold it for $300,000 US. I know prices went up since I sold it but I just wanted to sell a few properties while prices were high. I think the odds of that owner getting $350,000 is slim and none these days for the property you mentioned if it needs work.

But my friend just bought a property a few months ago on Ayacucho/Quintana for $470,000 US that was only around 125 sq. meters. Was in great condition. I thought it was a bit pricey but most of the other properties on the market were rubbish and needed a lot of work and the property still seemed cheap compared to where they live.

 

[Azteca]

It all depends on what are you comparing it with. Property for sale is Spain is much more expensive! Just googled some options and look at their prices for example https://tranio.com/spain/, seems like there are houses that cost millions and there are people who buy it. Probably Russians as usually, they always have money from God knows where So in my opinion real estate market in Buenos Aires is on a rise anf prices are reasonable.

 

[earlyretirement]

Well it just depends where in Spain. I'm looking at picking up some properties in Marbella and prices are reasonable. A few friends from the UK purchased up some properties there at very reasonable prices - https://www.marbellaforsale.com/sea...beds=0&minprice=&maxprice=&propref=&submitit=

 

[PhelipCer]

Well it just depends where in Spain. I'm looking at picking up some properties in Marbella and prices are reasonable. A few friends from the UK purchased up some properties there at very reasonable prices - https://www.marbellaforsale.com/sea...beds=0&minprice=&maxprice=&propref=&submitit=

Why not Greece property prices in Athens are cheap and has more tourists than most parts of Spain good for short term rentals

 

[earlyretirement]

Why not Greece property prices in Athens are cheap and has more tourists than most parts of Spain good for short term rentals

I don't go to Greece much at all. I go to Spain almost every year. I tend to buy real estate in areas I actually visit so I can also use them. What's a good website to look at real estate in Greece Phelip? Thanks.

 

[PhelipCer]

I don't go to Greece much at all. I go to Spain almost every year. I tend to buy real estate in areas I actually visit so I can also use them. What's a good website to look at real estate in Greece Phelip? Thanks.

The best person to ask is Garryl a member and realtor on this forum who recently brought real estate in Athens