Is 2025 a good time to buy real estate in Mexico?

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Everything you need to know is included in our Mexico Property Pack

Are you thinking of investing in property in the land of Mariachi? Are you thinking about whether you should buy now or postpone until next year?

Market timing is a subject where everyone has their own take. The Mexican real estate agent you consulted might advise you to buy property now, whereas your relative who actually resides in Mexico City may suggest waiting for more favorable market conditions.

At TheLatinvestor, when we create articles or update our pack of documents related to the real estate market in Mexico, we believe that facts and data are more important than opinions and rumors, so we prioritize them.

We have carefully studied official reports and statistics from government websites, and we now have a trustworthy database with important information. Here's what we discovered, which can help you decide if it's a good idea to purchase real estate in Mexico.

Have a nice read!

How is the property market in Mexico these days?

Mexico is, today, a relatively stable country

Neutral

Stability should be the first thing you look at when you want to invest in real estate because it minimizes legal, regulatory, and political risks. It is an information you need as a foreigner who might buy a property in Mexico.

These days, Mexico is experiencing a notable degree of stability. The last Fragile State Index reported for this country is 69, which is an acceptable number.

Mexico's relative stability today can be attributed to its diversified economy, which includes robust manufacturing, oil production, and a growing technology sector, providing resilience against global economic fluctuations. Additionally, the country's democratic political system, despite challenges, has allowed for peaceful transitions of power and reforms aimed at addressing corruption and improving public security.

Let's examine other data now to see if it's the right moment to purchase property in this country.

Mexico will keep growing

Positive

Before buying a property, consider the state of the country's economy.

According to the IMF's estimations, Mexico will end 2024 with a growth rate of 2.4%, which shows the country is on the right path. Regarding 2025, we're talking 1.4%.

On the longer term, the growth will still be there since Mexico's economy is expected to increase by 9.1% during the next 5 years, resulting in an average GDP growth rate of 1.8%.

A moderate growth rate in Mexico suggests a stable and predictable economic environment, which reduces the risk of sudden market fluctuations for property investors. Additionally, steady growth can lead to gradual increases in property values, offering potential long-term returns on investment.

Nevertheless, there are other indicators to watch.

Mexican business owners have faith in the economy's growth prospects

Positive

How does the Mexican entrepreneurs perceive their economy? Relying solely on the GDP forecast is not enough. Luckily, in Mexico there is an official metric that is regularly reported. We're lucky because this isn't true for every country.

The Business Consumer Index (BCI) is a measure of business leaders' confidence in the current and future economic conditions. It's calculated through surveys and assessments.

According to the Instituto Nacional de Estadística y Geografía's data, the latest Business Confidence Index value is 6 for Mexico. It can be interpreted as a rather neutral score.

Things haven't changed much, as the BCI score was, 12 months ago, at 7.

The current moderate level of business confidence in Mexico doesn't provide sufficient information to determine if it's the right time to invest in property there. Before making a decision, it's important to consider additional data and factors.

Mexico's population is growing but getting poorer

Negative

When you buy real estate, it's crucial to think about population growth and GDP per capita, since:

• 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 Mexico, the average GDP per capita has changed by -3.6% over the last 5 years. It's not a good number. However, the Mexican population is growing (+6% in 5 years).

You'll get really good rental yields in Mexico

Positive

To determine if a property investment can generate profits, analyze the expected rental yields.

It's the annual rental income of a property divided by its price. For example, if a property in Mexico is purchased for 2,000,000 MXN and generates 100,000 MXN in annual rental income, the rental yield would be 5%.

According to Numbeo, rental properties in Mexico offer gross rental yields ranging from 6.3% and 9.0%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Mexico.

Comparatively, the yields here surpass many other places.

Everything you need to know is included in our Mexico Property Pack

In Mexico, expect minimal inflationary effect

Neutral

Inflation is when the prices of goods and services keep getting higher.

It's when your customary taco al pastor costs 25 Mexican pesos instead of 20 Mexican pesos a couple of years ago.

If you're contemplating investing in a property, high inflation can bring you several benefits:

• Property values tend to increase over time, leading to potential capital appreciation.
• Inflation can result in higher rental rates, thereby boosting 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, such as depreciation deductions, can help offset the impact of inflation.

As per the IMF's forecasts, over the next 5 years, Mexico will have an inflation rate of 1.0%, which gives us an average yearly increase of 0.2%.

This data is telling us that Mexico is anticipated to experience negligible inflation. Unfortunately, in the absence of inflation, purchasing a property now may not result in substantial price increases or substantial profits in the future.

Mexico's currency is currently very low

Positive

If you're a foreign investor, this criterion can be interesting.

The Mexican Peso (MXN) is greatly devalued: the currency is currently 37-41% over the past five years.

As a foreign investor, purchasing property in Mexico when the currency is low can be advantageous, as it allows you to acquire real estate at a relatively lower cost when converted to your home currency. This potential for capital appreciation is attractive, especially if the Mexican peso strengthens over time, increasing the property's value in your own currency. However, it's crucial to consider the risks, such as currency volatility and local economic conditions, which could impact the investment's long-term profitability.

Is it a good time to buy real estate in Mexico then?

Time to conclude !

2025 is shaping up to be a promising year to invest in property in Mexico, thanks to the country's relative stability. Mexico has managed to maintain a stable political and economic environment, which is crucial for property investors looking for a safe place to put their money. This stability means that you can expect fewer surprises and more predictability when it comes to property values and market conditions. It's always reassuring to know that the country you're investing in isn't likely to experience sudden upheavals that could affect your investment.

Looking ahead, Mexico's economy is projected to grow by 9.1% over the next five years, which translates to an average GDP growth rate of 1.8% annually. This moderate growth rate is a good sign for property investors because it suggests a stable and predictable economic environment. When the economy grows steadily, it often leads to gradual increases in property values, which can offer you potential long-term returns on your investment. So, if you're thinking about buying property in Mexico, the economic outlook is definitely in your favor.

Another factor to consider is Mexico's growing population, which, despite facing economic challenges, continues to drive demand for housing. As more people look for places to live, the demand for rental properties is likely to remain strong. According to Numbeo, rental properties in Mexico offer attractive gross rental yields ranging from 6.3% to 9.0%. This means that if you decide to invest in rental properties, you could enjoy a healthy return on your investment through rental income.

Finally, it's worth noting that Mexico is expected to experience minimal inflationary effects in the coming years. This is good news for property investors because it means that the purchasing power of your investment is less likely to be eroded by inflation. With stable prices and a growing economy, 2025 could be an ideal time to buy property in Mexico, offering you a chance to benefit from both rental income and potential appreciation in property values.

We sincerely hope this article has been helpful!. If you need to know more, you can check our our pack of documents related to the real estate market in Mexico.

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.