Between a never-before-seen shortage of units on offer and the constant increase in property prices as a result of inflation, renting for Argentines has become an extremely complicated task.
A study by the Center for Economic and Social Studies Scalabrini Ortiz (CESO) indicates that they are the 1-room apartments that increased the most in 2022: 100%, with an average value of $60,000 for a new contract; while the increase turned out to be 84.2% for the 1 and 2 bedroom units.
And noting that there are, on average, 6,300 departments in rent in the City and almost 101,000 for sale, “values will continue to rise above inflation, due to low supply and high demand,” understands real estate market specialist Daniel Bryn. In fact, as of the Rental Law in force since June 30, 2020, there are neighborhoods where the price rose more than 340 percent.
To this is added that the number of people looking for properties to rent is unprecedented, well above the stock. “The value of rentals tried to follow the inflation, This discouraged the supply and the volume was greatly reduced, which caused contract renewals to increase to follow inflation.”
The rental values are tied to the estimated profitability and the value of the property. “With a Rental Law that regulates how much an owner can update the price by the ICL, as long as profitability exceeds inflation there will be supply, if that does not happen it will decrease even more,” clarifies Diego Migliorisi, managing partner of the real estate agency with the same name. .
Temporary rentals are imposed
And in a framework where, due to the scarce supply and the low annual rate generated by an income, the owners prefer to sell or not rent, some will continue to opt for temporary rentalsbecause “it can give a profit margin of 5% per year, but that, depending on the type of unit and neighborhood, it can be up to 8% (versus the 2.82% average of a permanent rental)”, adds Díaz.
In fact, there was 3,000 new rentals with this modality during 2022, according to data from Invertire.com.
Recovery of the real estate market
With almost 30,000 annual operations registered in the real-estate market and matching 2019 pre-pandemic levels, the comparison of the number of deeds of the last 11 months of 2022 versus 2021 –the figures for December have not yet come to light– shows an increase of 15.9%: 29,500, in total.
The average amount of the acts was $13,444,927 (US$79,612, according to the average official exchange rate); that is, it grew 15.9% in one year in pesos and, in US currency, it fell 27.4%, according to data from the College of Notaries of the City of Buenos Aires.
For its part, while the report with data for the second semester of 2022 is awaited, the College of Notaries of the Province made it known that during January and October the sale of properties stood at 71,550 operations, 14.73% below the average of the last 22 years. In this area, the drop in real estate values activated demand more than in CABA, with a lower average ticket: $21,667.
Thus, according to specialist Miguel Altgelt, “In the last 3 months of 2022, we noticed a recovery in the number of operations and in the drop in offers.” And since the money laundering law was a great incentive in that period that helped “to bring the public closer to the products in construction, the extension of the law to used ones can be a great tailwind to accompany the confidence of buyers “adds Daniela Yerro, director of the Baigún Residential Division.
However, In a scenario where the value of properties continued to drop compared to 2021, 2022 accumulated a 40% drop compared to 2019. According to specialists consulted, sales increased by 25%, boosted in the second half of the year by the honesty of prices.
In this sense, according to recent numbers from Zonaprop, Sales values fell 6.2% in 2022, but well units fell 2.8%, more stable than the price of used apartments, which decreased 8 percent.
And although the values of the properties fell, more did the income measured in dollars. “This caused the effort to purchase a home to be one of the worst recorded in history, and it is difficult for it to be reversed in the short term,” understands José Rozados, president of Real Estate Report. And more in an election year: “Whoever wants to sell will have to be inclined to reduce the price.”
According to property market specialist Daniel Bryn, For 46 months prices have been gradually declining“and it will continue to happen because there is no attractive sales market. Everything will depend on the urgency of people, how much they want to go down to close.”
Of course, “if demand were balanced and there was a more balanced volume of transactions, prices could rebound and go up, since we are matching historical levels of 10 years ago,” says Miguel Ludmer, director of Interwin.
How could this increase in demand be recorded? “Through credits, a stronger peso and/or a more stable context”, details Lucas Díaz, co-founder and COO of Mudafy, although “we do not believe that this will happen in the short term.”
There was price drop in the last 3 years “generated by a sharp drop in demand for properties that caused a lot of stock to accumulate. And only those who accommodated the lowest prices were able to sell. With this trend of higher demand, the price drop has already plateaued and the curve could begin to rise for property prices, albeit very slowly and in certain areas”, risks Patricio Rozenblum, co-founder of PBG developments.
