All sources have been thoroughly verified for credibility. Furthermore, an industry specialist has reviewed and approved the final article.
Everything you need to know is included in our Honduras Property Pack
Are you thinking of investing in property in Honduras? Are you wondering if it's the right time to buy?
Market timing is a topic that people have different thoughts on. Your Honduran friend might tell you that now is the ideal time to buy property, while your colleagues in Tegucigalpa 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 Honduras, we base our work on verifiable facts and concrete data rather than subjective opinions.
After thoroughly analyzing official reports and statistics available on government websites, we have gathered solid information in a database. Here are our findings that can assist you in determining whether it's the right time to invest in real estate in Honduras.
We hope you find this article helpful!
How is the property market in Honduras now?
Honduras is, nowadays, a relatively stable country
Neutral
If you want to invest in properties, prioritize stability as it fosters a thriving investment environment. It is an information you need as a foreigner buying a property in Honduras.
Currently, Honduras is somewhat stable as a country. The last Fragile State Index reported for this country is 78.7, which is a decent number.
Honduras has been able to maintain a relatively stable political and economic environment due to its strong commitment to democratic institutions and its implementation of structural economic reforms. Additionally, international support and cooperation from the US, the EU, and other countries has helped to promote economic growth and reduce poverty in the country.
We should now evaluate more data to see if the timing is right to buy property in this country.
Honduras is on track for significant expansion
Positive
Before buying a property, look at the performance of the country's economy.
As indicated by IMF projections, Honduras is set to conclude 2023 with a growth rate of 3.7%, which affirms the country's positive direction. Concerning 2024, the consensus estimate is 3.5%.
Besides that, the economy will keep growing since Honduras's economy is expected to increase by 16.8% during the next 5 years, resulting in an average GDP growth rate of 3.4%.
The expected sustainable growth rate in Honduras is beneficial for real estate investors because it indicates that the economy is steadily improving, which in turn increases the value of real estate investments in the country. Additionally, a higher growth rate implies that there will be more job opportunities in the country, which will lead to increased demand for housing.
However, there are other factors to consider beyond GDP growth.
Honduras is providing a lot more building permits
Positive
An important factor to consider when deciding whether it's an opportune time to invest in a property in a country is the number of building permits granted. When more building permits are issued, it usually showcases a flourishing and vibrant property market.
We have great news for you: the number of building permits delivered is surging in Honduras.
Over the last 12 months, according to Central Bank of Honduras, the number of building permits granted by Honduran local institutions rose by 34.5%, from 4,904 to 6,597 units.
Without any doubt, the data shows that many people think it's a favorable time to invest in property.
It's worth mentioning that more real estate will become available in the market. This data suggests a potential future drop in property prices in Honduras in 2024.
Honduras' population is getting (a bit) richer
Positive
When you're looking to buy real estate, population growth and GDP per capita deserve careful consideration 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 Honduras, the average GDP per capita has changed by 2.7% over the last 5 years. Though not substantial, there is still a positive trend of growth.
This means that, if you purchase a beachfront property in Roatán and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, the demand for rentals is predicted to increase in Honduran cities such as Tegucigalpa, San Pedro Sula, or Roatan Island in 2024.
Rental yields are exceptional in Honduras
Positive
To see if a property investment is profitable, check the expected rental yields.
It represents the annual rental income generated by a property divided by its purchase price or market value. For instance, if a property in Honduras is purchased for 1,000,000 HNL and generates 60,000 HNL in annual rental income, the rental yield would be 6%.
According to Numbeo, rental properties in Honduras offer gross rental yields ranging from 7.7% and 10.4%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Honduras.
It ranks among the top in the world.
Moreover, as seen before, there might be a drop in property prices (due to an increase in real estate supply) and more wealthy tenants, then gross rental yields are likely to increase in Honduras in 2024.
Everything you need to know is included in our Honduras Property Pack
In Honduras, inflation is projected to gain momentum
Positive
Simply put, inflation is the phenomenon of rising prices.
It's when your regular plate of baleadas costs 50 Honduran lempiras instead of 40 Honduran lempiras a couple of years ago.
If you're about to invest in a property, high inflation can benefit you:
- property values tend to increase over time, leading to potential capital appreciation
- inflation can result in higher rental rates, increasing 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, preserving the value of the investment
- diversifying into real estate provides stability during inflationary periods
- tax advantages, like depreciation deductions, can help offset the impact of inflation
Based on the IMF's outlook, over the next 5 years, Honduras will have an inflation rate of 21.0%, which gives us an average yearly increase of 4.2%.
This data shows that Honduras is likely to undergo inflation, so buying property now may lead to a profitable sale if its value rises over time.
Is it a good time to buy real estate in Honduras then?
Now it's time to draw our conclusions.
Without a doubt, 2024 presents a highly opportune time to invest in property in Honduras due to a convergence of favorable signals that point toward a prosperous investment environment. The country's trajectory toward significant expansion sets the stage for promising returns. As Honduras focuses on growth and development, property investors have the potential to benefit from an evolving real estate market.
The increase in building permits indicates proactive efforts by Honduras to facilitate property development. This can lead to increased opportunities for investment in real estate, whether for personal use or rental income purposes. Such initiatives contribute to a dynamic property market that aligns with the country's expansion goals.
With the population's improving wealth, property investment becomes even more enticing. Rising personal incomes often correlate with a higher demand for housing, both for residential and rental purposes. This heightened demand can translate into steady rental income streams and potential property value appreciation.
Exceptional rental yields present an attractive proposition for property investors. Honduras's combination of economic growth, urbanization, and tourism potential can drive strong rental demand, enhancing the potential for lucrative returns on investment.
Even with projected inflation gaining momentum, the country's overall investment landscape remains positive. Honduras's relative stability, coupled with the favorable signals, creates a secure foundation for property investments. In conclusion, the significant growth potential, increased building permits, improving population wealth, exceptional rental yields, and positive inflation outlook collectively make 2024 an opportune year to consider property investments in Honduras.
We wish this article has been of help!. If you need to know more, you can check our our pack of documents related to the real estate market in Honduras.
-Is it a good time to buy a property in Nicaragua?
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.
Buying real estate in Honduras can be risky
An increasing number of foreign investors are showing interest in Honduras. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.
