How the ability of income to cope with rising rents has deteriorated

Since the supply of real estate for rent has decreased, as a result of the new law, the price increase in these locations is surprising, as is known. For example, in the city of Buenos Aires, tenants a studio apartment rose 65.4% last year. However, it is necessary to measure this increase against the evolution of wages to take a real notion how much ability people are able to access renting a house.

Considering the evolution of prices in May, the rent of the smallest apartment on the market (one bedroom) increased by 7.5% compared to April, according to a survey by the Scalabrini Ortiz Center for Economic and Social Studies (CESO). Where, as calculated by the entity, the Minimum, Vital and Mobile Salary, now $ 38,940, covers 90.6% of $ 43,000 representing the median of studio apartments in the Buenos Aires district.

In the case of those who received the minimum pension ($ 32,630), that amount was enough to cover 75.9% of the rent of a studio apartment. Much less still, that income is enough for hiring departments two or three rooms, where the median of offers are $ 50,000 and $ 76,500, respectively.

In each category, prices vary depending on other characteristics (such as age, whether it has a garage, etc.) and its environment (infrastructure, availability of transportation, proximity to shopping centers, among others. ). These amounts monitored by CESO do not include costs, which amount to an average of 16% of the rental amount.

In the case of a one-bedroom apartment, take that into accounta year ago, in April 2021, the minimum wage is $ 23,554, (according to data from the Ministry of Labor) and the monthly rent is approximately $ 14,878, (according to this private survey) the loss of purchasing power of income is more pronounced. The monthly rent payment, 12 months ago, consumed 63.5% of the minimum income.

The study center stressed in its report that “although renting can have problems when it comes to getting guarantees or paying commissions, the cost of renting is the first -and in many cases, the biggest barrier to entry for people. “

“In the city of Buenos Aires, the high price prevents a large portion of the population from renting even a standard studio apartmentpush it towards areas with low quality infrastructure and services ”, he warned in this regard.

When analyzing the behavior of rents in the largest units, the survey showed that, in May, two-bedroom rose 3.1% compared to April and 9.3% in three-bedroom. Meanwhile, the interannual variation, in these units, is 66.7% and 70%, respectively, according to entity measurements led by economist Andrés Asiaín.

Surveys show, convincingly, that increases determined by supply and demand in a market plagued by uncertainty due to expected changes in law have resulted. above the official indicator currently used to apply to contracts. In this way, the Index for Lease Contracts (ICL) published daily by the Central Bank, shows a year-on-year increase of 53.9% on the first business day of May.

What also happens is that when a contract is renewed, the initial price is free, and may be higher than the last month of the previous contract.