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Everything you need to know is included in our Argentina Property Pack
Are you considering buying property in the land of Tango? Are you wondering if it's the right time to buy?
When it comes to market timing, people hold different beliefs. Your friend from Buenos Aires might tell you that now is the ideal time to buy property, while your Argentinean acquaintances may think that prices will soon decline.
At TheLatinvestor, when we create articles or update our pack of documents related to the real estate market in Argentina, we base our work on verifiable facts and concrete data rather than subjective opinions.
We have collected and examined all the official reports and statistics from government websites. Based on this extensive research, we have compiled a complete and reliable database. Here's what we discovered, which can assist you in deciding whether now is the right time to purchase real estate in Argentina.
Dive in and enjoy!
How is the property market in Argentina now?
Argentina is widely recognized, today, as a stable country
Positive
If you want to invest in real estate, prioritize stability as it influences the success of your investments. It is an information you need as a foreigner buying a property in Argentina.
Yes, Argentina is a country with a stable environment. The last Fragile State Index reported for this country is 47.9, which is a highly satisfactory number.
Argentina has a strong economy and is generally considered to be politically stable, with a long-standing democracy and a commitment to human rights. It is also an important regional leader in South America, with a strong diplomatic presence in international affairs.
Investing in this country rests on solid ground. Next, let's analyze the economic forecast.
Argentina will keep growing
Positive
Second thing to do before buying a property: determine if the country's economy is in good shape.
As projected by the IMF, Argentina will end 2023 with a growth rate of 0.2%, which is a bit disappointing. Regarding 2024, the figure we're looking at is 2%.
However, this low number is just for the short-term, as Argentina's economy is expected to increase by 7.4% during the next 5 years, resulting in an average GDP growth rate of 1.5%.
The moderate growth rate in Argentina indicates that the economy is stable and there is potential for long-term growth, making it a good option for someone who wants to invest in property. Additionally, the moderate growth rate means it is less likely for the market to experience wild fluctuations in prices.
That said, GDP growth is just one piece of the puzzle!
Argentina is delivering a lot more building permits
Positive
When determining whether it's a good time to purchase a property in a country, it's useful to take into account the quantity of building permits issued. When more building permits are issued, it demonstrates a strong vote of confidence in the property market's growth potential.
We have excellent news for you: the number of building permits delivered is exploding in Argentina.
Indeed, in the past year, according to Instituto Nacional de Estadística y Censos (INDEC), the total surface of building permits delivered by the Argentinian municipalities rose by 49.5%.
The data here strongly suggests that many people think it's a good time to invest in real estate.
Another important point to note is that there will be an increase in the number of real estate available in the market. Based on this information, it's possible that property prices will decrease in Argentina in 2024.
Argentinian inflation leaves everyone clueless about home prices
Neutral
Argentina's home prices have increased by 154.6% in 5 years according to Instituto Nacional de Estadística y Censos (INDEC).
It means that if you had bought a ranch in the Pampas for $750,000 five years ago, then it would now be worth around $1,910,000.
Currently, the galloping inflation creates a confusing situation where nobody knows how much things actually cost anymore, leading to widespread frustration.
At the end, it's difficult to draw conclusions from this data.
You can find a more detailed analysis of the real estate prices in our property pack for Argentina.
Everything you need to know is included in our Argentina Property Pack
Argentina's population is declining and getting poorer
Negative
Before you purchase real estate, take a moment to consider population growth and GDP per capita, because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Argentina, the average GDP per capita has changed by -1.3% over the last 5 years. It's not a good number.
Rental yields are quite low in Argentina
Neutral
If you want to know whether a property investment can be profitable, look at the expected rental yields.
Rental yield is the measure of how much money you can earn from renting out a property compared to its cost.
According to Numbeo, rental properties in Argentina offer gross rental yields ranging from 1.0% and 3.7%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Argentina.
It suggests that your real estate investment won't generate much returns or income.
As seen before, there might be a drop in property prices (due to an increase in real estate supply). However, since there won't be an increase in wealthy tenants, then we don't know whether gross rental yields are likely to increase in Argentina in 2024.
Everything you need to know is included in our Argentina Property Pack
In Argentina, inflation forecasts are reaching record highs
Positive
Inflation is the general increase in prices of goods and services over time.
It's when your customary plate of asado costs 600 Argentine pesos instead of 500 Argentine pesos a couple of years ago.
If you're contemplating investing in a property, high inflation can offer several advantages:
- Property values have a tendency to increase over time, potentially leading to capital appreciation.
- Inflation can result in higher rental rates, thereby increasing the cash flow from the property.
- Inflation reduces the real value of debt, making mortgage payments more affordable.
- Real estate can act as a hedge against inflation, effectively preserving the value of the investment.
- Diversifying into real estate provides stability during inflationary periods.
As per the IMF's forecasts, over the next 5 years, Argentina will have an inflation rate of 473.9%, which gives us an average yearly increase of 94.8%.
This data means that Argentina is expected to have significant inflation. Purchasing property now has the potential for its value to increase over time, leading to a possible profit when selling.
Argentina's currency is currently very low
Positive
If you plan to buy your property with a foreign currency, this is for you.
The Argentine Peso (ARS) is greatly devalued: the currency is currently 57-61% over the past five years.
As a foreign investor, buying a property in Argentina could be a good investment opportunity due to the current devaluation of the Argentine peso. This means that the property can be purchased at a much lower price than before, allowing for potential capital gains when the currency strengthens. As a result, foreign investors should consider the potential gains that could be made by investing in property in Argentina.
Is it a good time to buy real estate in Argentina then?
Time to conclude !
2024 presents a promising opportunity to invest in property in Argentina due to several favorable signals. The country's improved stability and consistent growth trajectory offer a conducive environment for property investment. With a surge in building permits, the real estate sector is experiencing growth, indicating potential for increased property value over time. Despite challenges, such as high inflation forecasts, Argentina's current undervalued currency enhances affordability for property buyers.
However, some neutral signals warrant consideration. The uncertainty stemming from Argentina's inflation could impact home prices, making it challenging to predict their future trajectory accurately. Additionally, rental yields are relatively low, potentially affecting the immediate returns on investment for property buyers.
Amid these factors, some negative signals must be weighed. Argentina's declining population and increasing poverty levels may pose challenges for sustained demand in the real estate market. These demographic shifts could influence long-term investment prospects by affecting the overall demand for housing and property.
Overall, 2024 could prove advantageous for property acquisition in Argentina. While certain uncertainties exist, the country's stability, growth potential, and accessible property market due to its currency valuation offer a favorable backdrop. Prospective investors should carefully consider these multifaceted signals to make informed decisions aligned with their investment goals.
We hope this article has offered you practical support!. If you need to know more, you can check our our pack of documents related to the real estate market in Argentina.
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This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
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