Authored by the expert who managed and guided the team behind the Mexico Real Estate Pack
Yes, the analysis of Mexico City's property market is included in our pack
Mexico City's house prices are unlikely to go down in the near future, with experts forecasting continued growth of 3-7% annually through 2026.
Strong foreign investment, limited new housing supply, and ongoing demand from both local and international buyers continue to push prices upward, despite moderating growth rates compared to post-pandemic peaks.
If you want to go deeper, you can check our pack of documents related to the real estate market in Mexico, based on reliable facts and data, not opinions or rumors.
Mexico City's housing market shows strong fundamentals with limited downside risk, as supply constraints and foreign investment continue to support price growth.
While growth rates have moderated from post-pandemic highs, structural factors including population growth and government housing policies favor continued price appreciation.
| Market Factor | Current Status (Sept 2025) | Impact on Prices |
|---|---|---|
| Average Price per m² | MXN 50,116 (USD 2,500) | 8.1% increase from 2024 |
| Monthly Price Growth | 0.6-0.7% per month | Moderating but positive |
| New Housing Supply | 128,143 units nationally (2024) | Severe shortage supports prices |
| Population Growth | 0.6-0.8% annually | Slowing but still positive demand |
| Mortgage Rates | 9-12% | High rates limit some buyers |
| Foreign Investment | 27% increase in 2023 | Strong upward pressure |
| Rental Yields | 5.7-6.2% | Attractive for investors |
What have house prices in Mexico City done over the past 5 to 10 years?
Mexico City house prices have shown strong and consistent growth over the past decade, with average annual increases of 7-9%.
The Mexico City residential market has outperformed the national average, experiencing some of the sharpest price increases in the country. Over the last ten years, urban markets like Mexico City have seen nominal increases averaging around 8% yearly.
Price appreciation accelerated significantly after the pandemic due to increased urban demand and constrained new housing supply. The post-2020 period saw particularly strong growth as remote work trends and lifestyle changes drove more buyers to seek properties in Mexico City.
This consistent upward trajectory reflects the city's status as Mexico's economic center and its appeal to both domestic and international buyers.
How fast are prices changing right now month by month?
As of September 2025, Mexico City house prices are increasing at a rate of 0.6-0.7% per month, which translates to approximately 7-9% annually.
This growth rate represents a moderation from the peak pandemic years but remains solidly positive. From Q4 2024 to Q2 2025, the Mexico City property market has maintained this steady monthly appreciation.
The current pace indicates that while the explosive growth of 2021-2022 has cooled, the underlying demand-supply imbalance continues to drive consistent price increases. Month-to-month variations are minimal, showing market stability.
It's something we develop in our Mexico property pack.
What is the average cost per square meter today compared to last year?
The average cost per square meter in Mexico City is currently MXN 50,116 (approximately USD 2,500) as of mid-2025.
This represents an 8.1% increase from 2024, when the average was approximately MXN 46,350 per square meter. The year-over-year comparison shows consistent appreciation across all property segments.
Premium areas like Polanco and Roma Norte command prices up to USD 5,500 per square meter, while emerging neighborhoods offer opportunities at lower price points. The lower-cost segments have actually experienced higher percentage growth rates.
This price appreciation reflects both inflation and genuine market demand, with foreign currency strength making Mexico City attractive to international buyers.
How many new housing units are being built in Mexico City each year?
Mexico City faces a severe housing supply shortage, with new construction failing to meet demand.
Nationally, only 128,143 new housing units were completed in 2024, representing the lowest total in over a decade and a 2.18% yearly decline. Mexico City's share of this already insufficient supply is proportionally small relative to demand.
The Mexican government has responded with an ambitious plan to deliver over 1.1 million new homes nationally by 2030, prioritizing affordable and social housing. However, complex permitting processes and high land costs in Mexico City continue to constrain private development.
This supply-demand imbalance is a key factor supporting continued price growth in the Mexico City housing market.
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Is population growth in Mexico City still rising, stable, or slowing down?
Mexico City's population is still growing but at a much slower rate than in previous decades.
The metropolitan area's population in 2025 is approximately 22.75 million, representing about 1.1% growth from 2024. However, the annual growth rate has decelerated to 0.6-0.8% yearly.
This slowdown is attributed to lower fertility rates, urban saturation, and some outward migration to smaller cities. Despite the deceleration, growth remains positive, which continues to support housing demand.
The slowing population growth rate suggests that future housing demand increases will be more moderate than in past decades, but the absolute numbers still represent significant ongoing demand.
How high are mortgage interest rates in Mexico right now compared to last year?
Mexican mortgage interest rates currently average 9-12%, remaining at multi-year highs due to ongoing tight monetary policy.
Compared to 2024, when rates were around 9.4-11.5%, current mortgage rates are essentially stable or slightly higher. This represents a continuation of the elevated rate environment that has persisted since 2022.
These high interest rates present a significant affordability challenge for many potential buyers, particularly first-time homeowners. The elevated borrowing costs have somewhat cooled demand from rate-sensitive buyers.
However, cash buyers and foreign investors with access to alternative financing continue to drive market activity despite high local mortgage rates.
What percentage of household income goes to paying a mortgage on average?
The average proportion of household income used for mortgage payments in Mexico City ranges from 30-40% of gross monthly income.
This percentage varies significantly based on down payment size, loan duration, and household income level. Many middle-income buyers find themselves at or above international affordability benchmarks.
Housing affordability has become a growing challenge in Mexico City, with mortgage payments often exceeding recommended financial guidelines. The combination of high property prices and elevated interest rates particularly impacts middle-income buyers.
Cash purchases and alternative financing arrangements have become more common as traditional mortgage affordability constraints tighten for many potential buyers.
Are foreign buyers and investors putting more or less money into Mexico City real estate?
Foreign direct investment in Mexico City real estate has surged dramatically, with 2023 showing a 27% increase and record-setting inflows continuing into 2025.
U.S., Canadian, and Spanish buyers are particularly active, benefiting from favorable currency exchange rates and Mexico City's appeal as a lifestyle destination. The foreign buyer presence has become a significant market force.
Regulatory frameworks have become more transparent and accessible for foreign investors, especially through "fideicomiso" trust structures for restricted zones. This has reduced barriers and increased foreign participation.
It's something we develop in our Mexico property pack.
The strong foreign investment trend is expected to continue, providing substantial support for Mexico City property values and contributing to upward price pressure.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Mexico 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.
What is the current rental yield, and is it trending up or down?
Mexico City apartments currently offer gross rental yields averaging 5.7-6.2%, which remains attractive for real estate investors.
However, rental yields have trended slightly downward in 2025 compared to late 2024, primarily due to faster appreciation in property values relative to rent increases. This compression reflects the strong capital appreciation environment.
Prime neighborhoods like Roma, Condesa, and Polanco show lower yields due to higher property prices, while working-class and middle-class areas may achieve higher rental returns. Geographic variation is significant within the city.
Despite the slight yield compression, Mexico City rental returns remain competitive compared to other major Latin American cities and continue to attract both domestic and international investors.
How many homes are currently on the market compared to a year ago?
Housing inventory in Mexico City remains tight, though listings have started to increase in 2025 compared to the acute shortage seen in recent years.
Current estimates suggest that homes for sale may be up 15-20% from a year ago, but inventory levels are still well below pre-pandemic levels. The market continues to favor sellers significantly.
New home availability remains particularly scarce, with most listings being resale properties. The supply shortage affects both the purchase and rental markets, contributing to continued price pressure.
Most of Mexico City operates as a seller's market, with demand far outpacing supply in popular districts, leading to quick sales and competitive bidding situations.
Are government policies or regulations making it easier or harder to buy property?
Government policies have generally become more favorable to property buyers and investors, with several initiatives aimed at improving market transparency and access.
Digital registries and clearer legal processes have been implemented, particularly benefiting foreign buyers. The fideicomiso trust system has been streamlined, making international property investment more accessible.
The government's new housing plan focuses on boosting supply at the affordable housing level and accelerating legal home titling processes. These initiatives aim to address the supply shortage while improving market efficiency.
However, complex permitting processes and high land costs in Mexico City continue to slow private development, limiting the impact of policy improvements on new housing supply.
It's something we develop in our Mexico property pack.
What are experts and major banks forecasting for Mexico City house prices over the next 12 to 24 months?
Most analysts and major banks forecast continued price growth for Mexico City real estate over the next 12-24 months, with annual increases of 3-7% expected.
The consensus view supports ongoing price appreciation driven by persistent supply shortages, sustained foreign buyer demand, and Mexico City's continued economic importance. However, growth rates are expected to moderate from recent peaks.
Key risk factors that could slow growth include sharp interest rate increases, significant policy changes, or a global economic downturn. However, no major correction or price decline is forecast by mainstream analysts.
The structural factors supporting Mexico City's housing market—including foreign investment flows, supply constraints, and demographic trends—are expected to provide continued price support through 2026.
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.
Mexico City's housing market demonstrates strong fundamentals that support continued price appreciation rather than decline.
The combination of limited supply, foreign investment inflows, and ongoing demand creates a favorable environment for property values through 2026.
Sources
- CEIC Data - Mexico House Prices Growth
- Statista - House Price Changes in Mexico
- The Latinvestor - Average House Price Mexico City
- Global Property Guide - Mexico Price History
- Mexico News Daily - Affordable Housing Plan
- MacroTrends - Mexico City Population
- World Population Review - Mexico City
- CEIC Data - Mexico Mortgage Rates
- Global Property Guide - Mexico Rental Yields
- The Latinvestor - Mexico City Price Forecasts