As the year 2009 began in the midst of a world financial crisis, one of the surprises in the Buenos Aires real estate market is that despite a lower demand, property values have remained the same values the previous months.
Current economic conditions are making price negotiations more complicated. Counter offers are rarely able to bring the price down more than ten percent. Exceptions to this are seen in outlying neighborhoods with standard properties. In these situations, sellers are more open to negotiating the selling price.
The real estate market is still suffering from a lack of accessible interest rate mortgage loans which would allow employed middle class families to afford a monthly mortgage payment. The Cámara Inmobiliaria Argentina (Argentine Real Estate Chamber) is requesting the government offer subsidized mortgage loans to stimulate the real estate market. In an attempt to stimulate the economy, the national government recently subsidized automobile loans, as well as loans for the purchase of major household goods such as refrigerators and washing machines.
What the government has done thus far, is approve legislation which motivates citizens who have undeclared funds outside or within the country to declare their funds and invest in real estate by charging them a tax rate of only one percent. This legislation which took effect March 1, 2009 should help stimulate the real estate market.
Though there are currently fewer buyers, there are also fewer sellers, thus maintaining prices stable. Most sellers are those that have a need to sell; however, they are holding firm to their asking price. Most buyers are investing in rental property and are hoping to find a good deal.
The Buenos Aires real estate market saw an absence of buyers from the agricultural sector this summer. Traditionally they come from the provinces to invest their profits in real estate. It’s not surprising that the current difficulties this sector is experiencing, a record breaking drought, increased costs and a dramatic drop in the price of commodities, have caused a marked reduction in their real estate investments.
The most sought after properties are those priced between 60,000 USD and 150,000 USD. Those who have sold their property want to find another property to invest in. Sellers who are in need of immediate cash might be more likely to lower their selling price, but if they are not in a rush, they will wait to sell at the desired price. Buyers that need to purchase a property may wait for a while, but in the end they will go ahead and buy. Arquitects are also inquiring about vacant lots for construction projects.
The good news is that confidence is higher than it was in October 2008. As one real estate agent said, “Commodities have tumbled, but the square meter still hasn’t.”