Authored by the expert who managed and guided the team behind the Peru Property Pack
Everything you need to know before buying real estate is included in our Dominican Republic Property Pack
Peru's residential property market is positioned for moderate but steady growth over the next two decades.
While the country experienced a significant housing boom from 2007 to 2013, price growth has moderated considerably since 2014, with real prices even declining in recent years due to inflation. As of September 2025, Peru's housing market shows signs of recovery with robust demand and improving economic fundamentals pointing toward sustainable price appreciation.
If you want to go deeper, you can check our pack of documents related to the real estate market in Peru, based on reliable facts and data, not opinions or rumors.
Peru's house prices are expected to grow at 3-4% annually in nominal terms over the next 10-20 years, driven by urbanization and improving household incomes.
Political stability, supply constraints, and inflation management will be the key factors determining whether Peru achieves low, medium, or high growth scenarios for residential property prices.
| Scenario | Nominal Annual Growth | Key Drivers |
|---|---|---|
| Low Growth | 0-2% | Political instability, high inflation, currency risks |
| Medium Growth (Most Likely) | 3-4% | Steady urbanization, moderate income growth, stable policies |
| High Growth | 5%+ | Strong commodity prices, accelerated reforms, foreign investment boom |
| Current Average Price | $2,713/m² | National average (Lima prime districts: $2,000/m²) |
| Regional Comparison | Mid-range | Higher than Bolivia/Ecuador, lower than Chile/Brazil |
| Population Growth | 1.41%/year | Lima adding ~157,500 residents annually |
| Urbanization by 2045 | 84.4% | Up from 79.6% in 2025 |
What have house prices in Peru done over the last 10, 20, and 30 years?
Peru's residential property prices have experienced distinct phases of growth and stabilization over the past three decades.
From 1999 to 2007, nominal residential prices remained broadly stable with minimal fluctuations. The market then entered a dramatic growth phase from 2007 to the late 2010s, with real prices more than doubling during this period. The most intense growth occurred during the 2010-2013 boom, when nominal prices surged 15-20% annually from 2010-2012, with some years like 2008 reaching over 34% growth.
Since 2014, Peru's housing market has experienced a significant cooling period following global commodity shocks. Price growth slowed dramatically, and in the last five years (2020-2025), nominal prices grew just 3-7% per year. More importantly, real prices have actually declined due to inflation outpacing nominal growth. In 2023, prices rose only 2.9% in nominal terms but were flat or slightly down (-0.36%) after adjusting for inflation.
As of September 2025, average prices Peru-wide for new units range from US$80,000–175,000, with Lima prime districts averaging US$2,000/m² and middle-income Lima areas priced at US$1,000–1,300/m². The national average price stands at approximately $2,713/m².
How do Peru's house prices compare with other Latin American countries today?
Peru's property prices position the country in the mid-to-upper range within Latin America as of 2025.
| City/Country | Average Price (US$/m²) | Position vs Peru |
|---|---|---|
| Santiago, Chile | $2,897 | 7% higher than Peru |
| São Paulo, Brazil | $2,494 | 8% lower than Peru |
| Lima, Peru | $2,713 | Baseline |
| Mexico City, Mexico | $2,420 | 11% lower than Peru |
| Bogotá, Colombia | $2,278 | 16% lower than Peru |
| Buenos Aires, Argentina | $2,022 | 25% lower than Peru |
| Quito, Ecuador | $1,831 | 32% lower than Peru |
| La Paz, Bolivia | $1,582 | 42% lower than Peru |
Peru ranks third among major Latin American markets, trailing only Chile and being slightly ahead of Brazil. The country's prices are significantly above regional neighbors like Bolivia and Ecuador, while remaining more affordable than Chile and competitive with Mexico and Brazil.
What is the current supply and demand situation in Peru's housing market?
Peru's housing market in 2025 shows robust demand growth but continues to face supply constraints that create an ongoing affordability crisis.
Home sales in Lima surged 25% in the first half of 2025, with inventory turnover dropping significantly, indicating strong and balanced demand-supply dynamics. Social Interest Housing (VIS) drives the majority of market activity, representing 68% of total sales. However, total new units delivered—such as Lima's 12,000 units in H1 2025—still lag behind annual population growth requirements.
Peru faces a persistent affordable housing deficit, with only 30% of policy goals currently being met. Migration patterns and continued urbanization create growing demand, with the market now shifting toward more compact units averaging around 65m² in well-located districts. This trend reflects both affordability pressures and changing lifestyle preferences among urban buyers.
The supply shortage is particularly acute in secondary cities like Arequipa, where the housing deficit grows at approximately 6% per year, forcing developers to focus increasingly on multifamily developments to maximize land efficiency.
How many new housing units are being built each year, and how does that compare to population growth?
Peru's housing construction significantly lags behind population growth, creating a structural supply deficit that supports long-term price stability.
Lima's population stands at 11.36 million as of 2024, growing at 1.41% annually, which translates to approximately 157,500 new residents each year. However, housing production in Lima reached only about 24,000 units for the full year 2025 (extrapolated from the 12,000 units delivered in H1 2025), creating a substantial gap between housing supply and demographic demand.
At the national level, urban population is forecast to reach 40 million by 2045, with urbanization increasing from the current 79.6% to approximately 84.4%. This represents millions of new urban residents who will require housing over the next two decades. The construction industry is expanding by 3.8% in 2025 following 4.6% growth in 2024, but this pace remains insufficient to close the existing deficit.
It's something we develop in our Peru property pack.
Secondary cities face even more acute shortages, with places like Arequipa experiencing housing deficit growth of 6% annually, forcing many urban centers to pursue aggressive multifamily development strategies to accommodate growing populations.
Don't lose money on your property in Peru
100% of people who have lost money there have spent less than 1 hour researching the market. We have reviewed everything there is to know. Grab our guide now.
What are Peru's population and urbanization projections over the next 20 years?
Peru's demographic trends strongly support continued housing demand growth through 2045, with significant urbanization driving property market expansion.
| Year | Total Population (Millions) | Urbanization Rate | Urban Population (Millions) |
|---|---|---|---|
| 2025 | 35.0 | 79.6% | 27.9 |
| 2030 | 36.0 | 80.7% | 29.1 |
| 2035 | 37.0 | 81.8% | 30.3 |
| 2040 | 38.5 | 83.1% | 32.0 |
| 2045 | 40.0 | 84.4% | 33.8 |
The urban population will grow by approximately 5.9 million people over the next 20 years, representing a 21% increase that will require substantial new housing construction. This urbanization trend concentrates demand in major metropolitan areas, particularly Lima, which continues to attract internal migrants seeking economic opportunities.
The steady increase in urbanization rate from 79.6% to 84.4% indicates that Peru will join the ranks of highly urbanized Latin American countries, creating sustained demand for urban housing developments and infrastructure.
What is the expected trend for household income and employment in Peru?
Peru's employment and income trends support continued housing market growth, with improving economic fundamentals enhancing affordability for middle-class buyers.
As of 2024, Peru has 17.5 million employed people with unemployment dropping to 4.7%, indicating a healthy labor market. Labor income averaged 1,766 soles per month in 2024, representing a 3.9% increase versus 2023 after adjusting for inflation. This real income growth directly translates to improved housing affordability for Peruvian families.
GDP growth forecasts of 3.1-4% for 2025 and beyond support continued employment expansion and wage growth, particularly in urban areas where formal employment opportunities are concentrated. The expanding formal economy also improves access to mortgage financing, as banks prefer lending to borrowers with documented income streams.
Middle-class expansion, driven by Peru's sustained economic growth over the past two decades, creates a growing pool of potential homebuyers who can qualify for mortgage financing and afford properties in the $80,000-175,000 range that represents the core of Peru's residential market.
How are interest rates and mortgage availability likely to evolve in the medium to long term?
Peru's mortgage market conditions are becoming increasingly favorable for homebuyers, with declining interest rates and improved credit access supporting property demand.
Mortgage interest rates fell to 7.44% as of June 2025, down significantly from the historical average of over 10%. This downward trend is expected to continue, with the central bank rate forecast to reach approximately 4% by 2026. Lower borrowing costs directly improve housing affordability by reducing monthly payment burdens for homebuyers.
Credit availability has expanded notably, particularly for middle-class borrowers who benefit from Peru's growing formal economy. Banks are more willing to lend as economic stability improves and default rates remain manageable. Government-backed mortgage programs also enhance access to financing for first-time buyers and moderate-income households.
The improving credit environment, combined with declining interest rates, creates a supportive backdrop for sustained housing demand over the next decade. These favorable financing conditions are particularly important for Peru's emerging middle class, who represent the primary driver of residential property demand.
What role will government housing policies, subsidies, or regulations play in the real estate market?
Peru's government maintains active involvement in the housing market through multiple subsidy programs and regulatory reforms designed to increase affordability and expand supply.
Key policy initiatives include Techo Propio, Nuevo Crédito Mi Vivienda, and the new Integrator BBP subsidies, which help low and middle-income buyers by covering 10-20% of property values. These programs specifically target the Social Interest Housing (VIS) segment that represents 68% of market activity, ensuring continued government support for the most active portion of the market.
Regulatory reforms have streamlined permitting processes in Lima and secondary cities, supporting supply growth and reducing development timelines. However, zoning limitations persist in high-demand districts, constraining supply in the most desirable areas and supporting price stability.
Infrastructure investments totaling $8 billion in 2025 focus on ports, transportation, and urban development that enhance property values and expand developable areas. These investments are particularly important for secondary cities seeking to accommodate growing populations and attract investment.
It's something we develop in our Peru property pack.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Peru versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
How might foreign investment and economic growth in Peru affect property demand?
Foreign investment and Peru's economic growth trajectory create positive momentum for residential property demand, particularly in Lima's prime districts.
Foreigners enjoy equal property rights in Peru along with an attractive legal and tax framework for real estate investment. This regulatory environment, combined with Peru's stable currency and positive economic outlook, has attracted increasing investor interest in Lima's prime residential districts where foreign buyers seek both investment returns and personal use properties.
Peru's continued GDP per capita growth and expanding middle class drive both domestic and foreign housing demand. The country's integration into global markets and improving infrastructure make it increasingly attractive to international investors seeking Latin American real estate exposure.
Economic diversification beyond traditional mining and agriculture creates more stable, long-term growth prospects that support sustained property appreciation. Urban development driven by economic expansion also improves the fundamental value proposition of residential real estate in major metropolitan areas.
Foreign investment flows are particularly concentrated in Lima's established neighborhoods, where international buyers appreciate proximity to business districts, quality infrastructure, and established property management services.
What risks could significantly reduce future house price growth, such as political instability or inflation?
Several key risks could derail Peru's positive housing market trajectory, with political and economic instability representing the most significant threats.
1. **Political instability and regulatory uncertainty** in high-demand urban zones may limit new supply development and create market volatility that deters both domestic and foreign investment.2. **Inflation acceleration** beyond the current stable rate of 1.65-2% could challenge housing affordability, particularly for middle-class buyers who drive market demand.3. **Housing affordability crisis deepening** without robust policy responses may widen the supply deficit and create social tensions that impact overall economic stability.4. **Natural disaster risks** from Peru's seismic activity and climate vulnerability, particularly as urbanization concentrates population and economic activity in risk-prone areas.5. **Global commodity price shocks** that could impact Peru's export-dependent economy and reduce household incomes, particularly affecting domestic demand for housing.Currency instability represents an additional risk, as significant devaluation could impact foreign investment flows and increase the cost of imported construction materials, potentially slowing supply growth and supporting prices through different mechanisms than healthy demand growth.
What do local experts and international institutions project for Peru's housing prices over the next 10 to 20 years?
Expert consensus points toward moderate but sustained growth for Peru's residential property market over the next two decades, with most projections calling for 3-4% nominal annual price appreciation.
Local analysts and international institutions expect continued urban-driven demand supported by demographic trends, offset by ongoing supply challenges and economic variability. The moderate growth expectation reflects Peru's maturing housing market, which has moved beyond the explosive growth phase of 2007-2013 into a more sustainable expansion pattern.
Most expert projections anticipate real price growth of 1-2% annually after inflation, representing genuine wealth building for property owners while maintaining relative affordability compared to historical peaks. This moderate pace allows income growth to keep pace with housing costs, supporting market stability.
International institutions emphasize Peru's positive fundamentals—stable democracy, growing economy, expanding middle class—while noting risks from political uncertainty and supply constraints that could impact the pace of growth within the projected range.
It's something we develop in our Peru property pack.
What are the most likely scenarios for house price growth in Peru—low, medium, and high—and what factors would drive each one?
Three distinct scenarios capture the range of possible outcomes for Peru's housing market over the next 10-20 years, each driven by different combinations of economic, political, and demographic factors.
**Low Growth Scenario (0-2% nominal annual growth):**- Persistent inflation above 3-4% annually eroding purchasing power- Political instability and regulatory uncertainty deterring investment - Slow income growth limiting domestic demand- Currency instability impacting foreign investment flows- Policy failures to address supply constraints**Medium Growth Scenario (3-4% nominal annual growth - Most Likely):**- Moderately expanding urban population driving steady demand- Sustained job and income growth supporting affordability- Ongoing supply constraints maintaining price support- Continued government policy support for housing programs- Stable political and economic environment**High Growth Scenario (5%+ nominal annual growth):**- Strong global commodity prices boosting economic growth- Accelerated urbanization and population growth- Successful policy reforms increasing housing supply efficiency- Global economic recovery driving foreign investment boom- Infrastructure investments significantly enhancing property valuesThe medium growth scenario represents the most probable outcome given Peru's current economic trajectory, demographic trends, and policy framework. This scenario balances realistic demand growth against persistent supply challenges while assuming continued political and economic stability.
Conclusion
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.
Peru's residential property market offers solid long-term investment potential, particularly in urban centers like Lima.
While price growth has moderated from the boom years of 2007-2013, demographic trends, improving economic fundamentals, and government policy support create favorable conditions for sustained appreciation over the next two decades.
Sources
- Graduate Institute - Peru Housing Market Analysis
- Global Property Guide - Peru Price History
- The LatinVestor - Peru Price Forecasts
- Aparthotel - Peru Market Analysis
- Global Property Guide - Latin America Square Meter Prices
- Home Ready Global - Lima Housing Sales Report
- BBVA Research - Peru Economic Outlook
- The LatinVestor - Peru Real Estate Trends