For the second consecutive month, the prices of the properties in Buenos Aires fell
April and May changed a stable previous trend by tilting the course of prices downwards. 73% of the districts recorded a decrease or a stagnation of prices generating a concrete possibility for the investors looking for a home for savings a great opportunity not seen for many years.
According to a report prepared by the Zonaprop portal, after a period of five months of stable values (November 2018 to March 2019), for the second consecutive month, the sale prices of the properties showed a slight downward trend, as had also happened in April.
Although the fall from last month was not significative being only 0.1%, this behaviour accentuates the slowdown that has gone through the real estate market since the mid part of last year. This contraction generated by the lower volume of sales opens a concrete possibility for prospective buyers. Currently, 73% of the neighbourhoods of Buenos Aires registered a decrease or stagnation of prices.
The average price of a department in the city of Buenos Aires is now at USD 2,555 m2. This average covers a wide range that goes from USD 5,767 in Puerto Madero to USD 1,204 in Villa Lugano. According to this data, an average unit of two rooms of 50 m2 is worth now USD 134,000, whilst one of 3 rooms and 70 m2 reaches USD 187,000.
This process of a price slowdown began in June 2018, with April and May of this year showing a decline in prices. Núñez, La Boca and tribunals are the neighbourhoods with the highest depreciation so far this year, as the amounts there fell around 4%.
With respect to rents, the increase has been 2.3% in the month of May, accumulating a rise of 12.1% in what goes from 2019 and 35% in the last twelve months. However, the annualized slow down of the last few months decreases the speed to 31% annual.
On the other hand, it should be noted that the quotas of the GRAPE credits increased by 18.5% in 2019, this being higher than its increase to the average rise of the rents (12.1%). Chacarita, Puerto Madero and Abasto are the neighbourhoods had the highest annual increase in rents, with increases above 48%. The average rent of an apartment of 2 main rooms oscillates between 13,900 and 16,200 Argentine pesos per month.
Profitability, the rental/price ratio works out at 3.3% annual value which is a historical low. The strong devaluation of the peso has kept the rent measured in dollars at lower values relative to the price of the properties. Currently, it takes 29.9 years of rent to recover the cost of the investment.
Note: The most likely explanation for this slow down was the threat of the return of the business unfriendly Kirchner Government led by Christine Kirchner in the upcoming October elections. This possibility now looks less likely due to recent polls showing the incumbent administration is more popular.