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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 78.1, which is a decent number.
Honduras has achieved relative stability through concerted efforts to strengthen democratic institutions and improve public security, particularly by reducing crime rates and enhancing law enforcement capabilities. Additionally, international support and economic reforms have contributed to fostering a more stable environment conducive to investment and development.
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 2024 with a growth rate of 3.6%, which affirms the country's positive direction. Regarding 2025, the consensus estimate is 3.7%.
Besides that, the economy will keep growing since Honduras's economy is expected to increase by 17% during the next 5 years, resulting in an average GDP growth rate of 3.4%.
The expected sustainable growth rate in Honduras indicates a stable and improving economy, which can lead to increased property values and rental demand. For a real estate investor, this means potential for higher returns and a more secure investment environment.
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 2025.
Honduras' population is growing and 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. Furthermore, the Honduran population is growing (+11% in 5 years).
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 2025.
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 2025.
Everything you need to know is included in our Honduras Property Pack
In Honduras, inflation is anticipated to be minimal
Neutral
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 1.0%, which gives us an average yearly increase of 0.2%.
This data shows that Honduras is expected to have near-zero inflation then. Prices won't rise and then your property investment may not appreciate.
Is it a good time to buy real estate in Honduras then?
Now it's time to draw our conclusions.
2025 is shaping up to be a promising year to invest in property in Honduras, thanks to its current stability. The country has been enjoying a relatively stable political and social environment, which is crucial for any real estate investment. Stability reduces risks and uncertainties, making it easier for investors to plan and make informed decisions. This stable backdrop provides a solid foundation for property investments, ensuring that your assets are less likely to be affected by sudden political or economic upheavals.
Moreover, Honduras's economy is on an upward trajectory, with an expected growth of 17% over the next five years, translating to an average GDP growth rate of 3.4%. This sustainable growth rate is a positive indicator of a stable and improving economy, which can lead to increased property values and rental demand. For real estate investors, this means there is potential for higher returns and a more secure investment environment. As the economy grows, so does the purchasing power of the population, which can further drive demand for housing.
Another encouraging sign is the increase in building permits being issued in Honduras. This suggests that the government is supportive of development and is likely to continue facilitating growth in the real estate sector. Coupled with a growing population that is gradually becoming wealthier, there is a clear indication of rising demand for housing. This demand can lead to appreciation in property values, making it a potentially lucrative time to buy property in the country.
Additionally, rental properties in Honduras offer attractive gross rental yields, ranging from 7.7% to 10.4%, according to Numbeo. This makes the rental market in Honduras particularly appealing for investors looking for steady income streams. With inflation anticipated to be minimal, the real value of rental income is likely to be preserved, further enhancing the attractiveness of property investments. All these factors combined make 2025 a potentially rewarding time to invest in the Honduran real estate market.
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.
-Will real estate prices go up in Honduras?
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.