Rising housing prices, the challenge

MEXICO CITY (El Universal).— Mexico is not the only country facing rising housing costs, as it is a continent-wide phenomenon.

Damian Tabakman, global consultant in Real Estate and coordinator of the Real Estate Investments and Developments Congress Expo Real Estate, explained that housing became more expensive after the pandemic. And now the cost of construction plus inflation occurs throughout the continent, but particularly in Latin America.

“In the post-pandemic, construction inputs became very expensive and the dynamics of consolidation of Latin American cities made the final price very expensive,” he explained. “Financing costs, interest rates in the world are not falling and that further restricts the supply of mortgage credit.”

In addition, he said, developers expect higher returns on their investments, which affects both housing sales and rentals.

Tabakman commented that, in Argentina, the government intervened by regulating rents by setting a cap to try to help tenants, but the effect was that many people stopped renting their homes and the supply decreased.

“It brought the opposite effect. The supply was restricted and the available housing ended up being more expensive because it was scarce,” he noted.

Latin America with the largest number of expensive cities

A recent study by Lamudi found that in 16 of 17 cities in Latin America, it takes more than three minimum wages to rent in a middle-class neighborhood. Like in the Narvarte neighborhood in Mexico City, or Chapalita in Guadalajara.

The consultant added that inflation and interest rates are on “a plateau” where they are not rising, but they are not falling either, so he does not perceive signs of improvement in construction costs and housing prices.

“When the cost of construction becomes more expensive, the final price of housing becomes more inaccessible, unless it is subsidized in some way by the government. But in Latin America, governments do not have the fiscal slack to do so,” he indicated.

CDMX, in second place

At the end of last year, the cities with the most expensive square meter in Latin America were Montevideo, Uruguay, with 3,166 dollars. Mexico City, with 2,948 dollars. Monterrey, with 2,621 dollars, and Guadalajara, with 2,535 dollars. The calculation was made from the price published in sales notices on websites in the region, mostly from the QuintoAndar Group.