Buenos Aires Real Estate

Accessibility to housing for the middle class is a hot button issue in the real estate world. Market development in the past ten years has remained directed towards those with a greater buying power. As the middle class has a true demand for housing, opening the market to that sector would expand the level of activity within the real estate market, and help that class, as well.

However, resolving this problem means thinking about mortgages, which brings up two different issues. First, a good return must be provided to those giving funding, but also, real payment capacity of potential funding must be considered.

Profitability and accessibility are equally important, and the real estate market needs to consider both sides of things. Given that both objectives are not necessarily compatible, it is unavoidable to work to bring coherence to the system.

So what happens in the Buenos Aires real estate market? We live in a context of disintermediation. Those who have savings don’t trust in the banks, and those who need long-term financing refuse to turn to financial entities. So what alternative is there? To encourage savings. Savings work to boost a functioning economy, creating jobs and maintaining existing jobs, as does investment. So, encouraging savings is a means to housing access.

When thinking about mortgages or savings, it is important to consider how much the family can afford. The monthly payment fee, in turn, is directly related to the rate, and inversely related to the term. That is, the longer the term, the lower the fee, and the higher the rate, the higher the fee.

In mortgage financing, it is important to consider both factors; demand requires long terms and also accessible rates.

When considering savings, the only issue that really matters is the term. Developers have to design fund integration mechanisms for businesses, according to the real possibilities of the middle class; initially savings need to be integrated, and then accessible mortgages need to become available. But no matter who designs the tools to make housing accessible to the middle class, they need to remember that the key is in the rate.