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With inflation down and wages recovering, how are rents adjusted today and what are the average prices? - Infobae
Source:
December 18, 2024
A private report detected the average number of usual updates after the DNU that repealed the Rental Law and the impact of mortgage loans among the real estate agencies consulted
By Jose Luis Cieri
The ICL is the most widely used method in the interior to adjust rental contracts (Illustrative Image Infobae)
A report by the Argentine Real Estate Federation (FIRA) revealed the types of adjustments most commonly used in new rental contracts, the impact of DNU 70-2023 that repealed the Rental Law (December 29 marks one year since this measure was implemented) on the residential market, and the progress of mortgage loans in the purchase and sale of homes.
With inflation on the decline and wages recovering slightly, the rental market is showing signs of stabilisation . Contracts, which are mostly adjusted through the Rental Contract Index (ICL), are registering more moderate updates compared to the peaks of mid-year. And quarterly updates predominate.
"This dynamic allows agreements between owners and tenants to be more sustainable and more aligned with payment capacity," Emilio Caravaca Pazos , president of FIRA, told Infobae.
Other adjustment systems used include the Consumer Price Index (CPI) and, to a lesser extent, the Argentine Chamber of Construction (CAC) Index. The report also confirmed that the most frequent contract duration is 24 months, followed by 36- and 12-month agreements (see chart below).
The analysis is based on data from real estate agencies surveyed by FIRA throughout the country, from their property management portfolios, which total 50,400 units.
Caravaca Pazos pointed out that the impact of the repeal of the Rental Law was uneven between the residential and commercial segments. “In commercial rentals, the effect was less because, being little intervened by the previous law and with greater freedom of negotiation between the parties, they operated with balance and good availability,” he explained.
On the other hand, in residential rentals, the Government's DNU generated a significant improvement. "There was a significant increase in supply, with tourist rentals returning to the traditional market. Prices were adjusted to market values and, although some indices may have been high at certain times, the autonomy of the parties allowed them to renegotiate conditions and maintain the continuity of the contracts," Caravaca Pazos highlighted.
Josefina Pantano , secretary general of the organization, attributed this level of stability to the slowdown in inflation and salary increases. “The tendency to balance prices with the ability to pay was also a determining factor.”
Regarding the methodology used to update rental values, the ICL (combination of wages and inflation) was the most chosen. “The ICL was preferred in residential rents because, being a mix between wages and inflation, it was expected to be more balanced,” explained Pantano.
However, he indicated that, in practice, the collective bargaining agreements that adjusted wages caused the ICL to exceed the Consumer Price Index (CPI) at certain times. “It was an unexpected effect, but it was corrected through agreements between the parties and the intervention of real estate agents,” he pointed out.
One-bedroom apartments :
Two-bedroom apartments :
“Being able to count on mortgage loans means an improvement, even if not all the sector that needs housing can access them. Today it serves a part of that sector or for investors who then put the properties on the rental market,” he explained.
Although he acknowledged that access conditions could be improved – such as the amounts granted and the terms of completion – Pantano highlighted the potential of divisible mortgages , which are soon to be regulated. “These could cover the needs of an additional segment of the population,” he added.
Source: Real Estate Federation of the Argentine Republic (FIRA)
For his part, Caravaca Pazos referred to the level of enquiries in the interior of the country. “In provinces with lower salary levels, the impact of the mortgage credit market is more limited compared to large cities. However, the recent implementation of credit lines generates interest. It is key that more options emerge with lower requirements and a greater range of access.” In addition, he pointed out that long-term economic, inflationary and exchange stability will be essential to consolidate this tool as a driving force of the market.
Regarding the measures needed to strengthen the use of mortgage loans, Caravaca Pazos stressed the need to expand access options. “In the interior of the country there is a high level of consultations, which demonstrates the interest in the tool. However, salary levels outside the large urban centers limit access. It is essential to have options that adapt to this reality and allow for greater inclusion,” he explained.
He also considered that the recent lines of credit are a first step, but they need to be complemented with long-term macroeconomic stability. “The mortgage market can become a key factor for the development of the real estate sector if it can be consolidated,” he concluded.
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Source:
Con la inflación en baja y salarios que se recuperan, cómo se ajustan hoy los alquileres y cuáles son los precios promedio
Un informe privado detectó cual es el promedio de actualizaciones usuales tras el DNU que derogó la Ley de Alquileres y el impacto de los créditos hipotecarios entre las inmobiliarias consultadas
www.infobae.com
December 18, 2024
A private report detected the average number of usual updates after the DNU that repealed the Rental Law and the impact of mortgage loans among the real estate agencies consulted
By Jose Luis Cieri
The ICL is the most widely used method in the interior to adjust rental contracts (Illustrative Image Infobae)
A report by the Argentine Real Estate Federation (FIRA) revealed the types of adjustments most commonly used in new rental contracts, the impact of DNU 70-2023 that repealed the Rental Law (December 29 marks one year since this measure was implemented) on the residential market, and the progress of mortgage loans in the purchase and sale of homes.
With inflation on the decline and wages recovering slightly, the rental market is showing signs of stabilisation . Contracts, which are mostly adjusted through the Rental Contract Index (ICL), are registering more moderate updates compared to the peaks of mid-year. And quarterly updates predominate.
"This dynamic allows agreements between owners and tenants to be more sustainable and more aligned with payment capacity," Emilio Caravaca Pazos , president of FIRA, told Infobae.
Other adjustment systems used include the Consumer Price Index (CPI) and, to a lesser extent, the Argentine Chamber of Construction (CAC) Index. The report also confirmed that the most frequent contract duration is 24 months, followed by 36- and 12-month agreements (see chart below).
The analysis is based on data from real estate agencies surveyed by FIRA throughout the country, from their property management portfolios, which total 50,400 units.
Caravaca Pazos pointed out that the impact of the repeal of the Rental Law was uneven between the residential and commercial segments. “In commercial rentals, the effect was less because, being little intervened by the previous law and with greater freedom of negotiation between the parties, they operated with balance and good availability,” he explained.
On the other hand, in residential rentals, the Government's DNU generated a significant improvement. "There was a significant increase in supply, with tourist rentals returning to the traditional market. Prices were adjusted to market values and, although some indices may have been high at certain times, the autonomy of the parties allowed them to renegotiate conditions and maintain the continuity of the contracts," Caravaca Pazos highlighted.
Stability
The FIRA report shows a 98% compliance in rent payments, both in homes and businesses.Josefina Pantano , secretary general of the organization, attributed this level of stability to the slowdown in inflation and salary increases. “The tendency to balance prices with the ability to pay was also a determining factor.”
Regarding the methodology used to update rental values, the ICL (combination of wages and inflation) was the most chosen. “The ICL was preferred in residential rents because, being a mix between wages and inflation, it was expected to be more balanced,” explained Pantano.
However, he indicated that, in practice, the collective bargaining agreements that adjusted wages caused the ICL to exceed the Consumer Price Index (CPI) at certain times. “It was an unexpected effect, but it was corrected through agreements between the parties and the intervention of real estate agents,” he pointed out.
Average values
Below are the average rental prices in the countryOne-bedroom apartments :
- Bahia Blanca: $310,500.
- Bariloche: $683,750.
- Cordoba Capital: $375,000.
- Mar del Plata: $382,500.
- Mendoza Capital: $386,000.
- Neuquen Capital: $561,430.
- Posadas: $322,500.
- Rosario: $308,000.
- Salta Capital: $413,000.
- Santa Fe Capital: $266,500.
- San Miguel de Tucumán: $245,550.
In CABA, according to Real Estate Report, one-bedroom apartments average $490,500 and two-bedroom apartments, $664,900 per month.
Two-bedroom apartments :
- Bahia Blanca: $465,000.
- Bariloche: $833,350.
- Cordoba Capital: $433,335.
- Mar del Plata: $528,335.
- Mendoza Capital: $504,165.
- Neuquen Capital: $723,335.
- Posadas: $547,445.
- Rosario: $421,335.
- Salta Capital: $574,445.
- Santa Fe Capital: $396,500.
- San Miguel de Tucumán: $380,500.
Mortgage loans and demand
Access to mortgage loans was another of the issues highlighted in the report. Pantano considered that the tool represents an important advance, although not yet massive.“Being able to count on mortgage loans means an improvement, even if not all the sector that needs housing can access them. Today it serves a part of that sector or for investors who then put the properties on the rental market,” he explained.
Although he acknowledged that access conditions could be improved – such as the amounts granted and the terms of completion – Pantano highlighted the potential of divisible mortgages , which are soon to be regulated. “These could cover the needs of an additional segment of the population,” he added.
Source: Real Estate Federation of the Argentine Republic (FIRA)
For his part, Caravaca Pazos referred to the level of enquiries in the interior of the country. “In provinces with lower salary levels, the impact of the mortgage credit market is more limited compared to large cities. However, the recent implementation of credit lines generates interest. It is key that more options emerge with lower requirements and a greater range of access.” In addition, he pointed out that long-term economic, inflationary and exchange stability will be essential to consolidate this tool as a driving force of the market.
Regarding the measures needed to strengthen the use of mortgage loans, Caravaca Pazos stressed the need to expand access options. “In the interior of the country there is a high level of consultations, which demonstrates the interest in the tool. However, salary levels outside the large urban centers limit access. It is essential to have options that adapt to this reality and allow for greater inclusion,” he explained.
He also considered that the recent lines of credit are a first step, but they need to be complemented with long-term macroeconomic stability. “The mortgage market can become a key factor for the development of the real estate sector if it can be consolidated,” he concluded.
www.buysellba.com