November 2024 BA Real Estate update
Mortgage and RE sales update for November 2024
Welcome Avatar! After a new record month for real estate sales this year in October and deeds with mortgages doing a 300% compared to 2023, it looks like the market has found a new plateau for now. Let’s dig into the details.
November Real Estate Overview
For November 2024, the average price/m2 has found a plateau and this will likely serve as a base for future growth.
November to January tend to be slower months in general, and it is likely that the local buying peak occurred right after the cut off date of the blanqueo / tax amnesty.
An average studio apartment or monoambiente is now in the range of 102k usd (in Palermo a new studio apartment is closer to 108k usd), the average 1-bedroom is around 123k and a 2-bedroom close to 170k.
Just in in 2024 alone, sales prices have accumulated an increase of 6.6% on average, but November did not register an increase in average m2 prices:
Average prices for “used” properties is always significantly lower compared to investing in a pozo or new construction development, but in November something interesting happened: pozo pricing was higher than newly finished unit pricing:
This indicates that investment interest for m2 in Buenos Aires and particularly in new constructions is very high. Construction costs are still high, and even though you can see cranes on almost every block in the city, activity has still not recovered to previous levels.
Taking into account that these are averages, you can be safe that a new development or construction project that just finished and is now on the market are easily $4.2k+/m2 in Palermo, for example, while the average m2 price in Palermo is $3,209/m2.
Pozo m2 prices increased by 16.63% in 2024 alone, which is pretty significant. Depending on your payment structure (in pesos adjusted at the construction index or in fixed USD instalments) you can be up or down, since the peso appreciated and there was still reasonable inflation that made peso installments about 20-30% more expensive in dollar terms.
So much for shorting the peso in 2024, it was the wrong year to do that, that’s for sure.
Mortgage Trends
In October 2024, mortgage issuance hit a new interim high after so many years of close to zero hipotecas. The Valor Promedio De Escrituración En Dólares (VPE), which is the average deed price at the official rate, is back at 2020 levels.
Given the fact that this year’s number is with currency restrictions still in place, this number is quite remarkable. Also good to see the increase in mortgages, which is a trend that will keep on going as long as BCRA interest rates are below inflation levels. Recently, rates were lowered again, and this trend will continue.
Now in this deed overview for real estate sales in Buenos Aires it’s important to take into account that pozo investments usually do not show up here, because you cannot “register” the property yet since it doesn’t exist yet. So all these unit contracts are not taken into account. With those added, these numbers would be many times higher.
Read more about the mortgage credit dynamics and the impact on prices in the short to medium term:
Looking at sales, Buenos Aires registered a +31% increase in real sales compared to the same period last year:
Reminder that these numbers do not include “boletos”, which are the contracts signed for new developments that are still under construction.
Autist note: you can find some additional articles below that shed some more light on Argentina’s real estate market:
Total inventory for all units listing for sales is about 15 months of sales at the current rate, which is already a big improvement compared to the 20 months of sales in October 2023.
In October 2023, the turnover was at a very low 60%. Of every 10 properties for sale, only 6 were sold. In October 2024, turnover is at 82%. 8 out of every 10 properties for sale are sold.
Conclusion
It’s good to see the market take a bit of a breather, with a no significant increase MoM for the average m2 price in most neighborhoods. In my opinion this is a new baseline for future price appreciation.
Short term rental returns are still in the 5-8% range, depending on many different factors, but a side note on short term rentals and Airbnbs is that the current market without the previous Rental Law restrictions has made many Airbnb owners decide to offer their property on the long term rental market again (since less hassle, and they can get reasonable rents priced in USD now and adjust rates according to their own terms).
This is a positive for STR owners that stay in the game, and occupancy has been higher (also seasonal) since mid-2024, with higher returns.
See you in the Jungle, anon!
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All spot on target data. Pozos are on fire. We are seeing lots of projects even breaking ground now with half the building sold. Most people don't want to hassle with pain in the ass renovations and almost all pre-existing properties need some work usually in the kitchens or bathrooms.
2025 and 2026 are going to be fun years watching a bunch of those blanqueo dollars go into the real estate sector.
It is also nice that many locals are shifting and getting out of Airbnb's and going to long-term market. Unfortunately there is a drop of tourism of about 35% to 40% so that is not good but once the peso gets to a reasonable level, and also as more and more companies start operations here again after the CEPO ends, corporate travel should pick up.