What do we observe in the real estate market that can give us an idea of what will happen for 2024?
Some positive signs:
–the repeal of the rent law It sheds light on the future of the market which has a positive effect on the real estate sales segment. Furthermore, lto the investor’s return. It is always thought that the investor is a powerful person with a lot of money and it is not taken into account that in recent decades, practically without credit, investments were largely in the hands of independent professionals, who with their savings could invest in real estate seeing in this type of investment a safeguard of value.
The repeal of the law once again offers these professionals the opportunity to make the most of the effort behind their savings the logical real estate income that adjusts for inflation. At the same time, this dynamic favors the rental market by increasing supply and allowing access to rentals to a greater number of people.
–Tax on real estate transfer and money laundering: lThe latest proposals contained in the omnibus law include the elimination of taxes (ITI) and frictions which always work as positive incentives for the real estate market even if they are not the most powerful.
As for money laundering, it can generate some improvement since always in times of actions there is an undeclared saving through the purchase of informal dollars, but the reality is that these tools can only achieve a timid short-term improvement.
Some obstacles:
– A change in trend in the offer of properties for sale. Something we have observed over the last six months is a prolonged decline in the number of apartments offered for sale In the city of Buenos Aires. What does this mean? 30% fewer purchase options compared to 2023. This factor can generate general stability in prices and even an increase in those that have less competition, offer a great location, quality of construction and services.
-Lack of credit: Without credit there will not be a large volume of sales. The only thing that has moved the real estate market in recent years is private sector savings. 2023 was a good year in terms of facts (compared to the last four) due to the sharp drop in real estate prices compared to 2019. Let’s remember that if there is something that has fallen from 2019, it is the price per square meter, exceeding a 35% drop in dollar terms nominal, i.e. without adjustment for US inflation. This data comes from the ROI, the Real Estate Operations Survey. To the extent that there is no credit, we are unlikely to see a significant reactivation of the buying and selling market.
-Construction costs vs. dollar price: In recent months, the cost of construction has exceeded the rate of inflation, generating pressure on pre-sale property prices. This situation can shift demand towards units already built and ready to be inhabited, which present themselves as interesting opportunities for investors, as they offer the possibility of immediately generating rental income. This phenomenon is strengthened by the support of the Decree of Necessity and Urgency (DNU), which promotes improvements in the rental market.
The most important brakes that have influenced the market have always been on the macroeconomic side: the exchange rate, lack of credit, inflation and the high volatility of the price of the dollar. All these variables are somehow linked to each other and what will happen in the market will largely depend on their evolution.
Source: Clarin
