Will house prices go down in Panama City?

Authored by the expert who managed and guided the team behind the Panama Property Pack

Yes, the analysis of Panama City's property market is included in our pack

Who is the author of this content?

THE LATINVESTOR

A team specialized in real estate investing in LATAM countries

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Panama City (in the country Panama). If you'd like to learn more about us, you can check our presentation page.

How this content was created 🔎📝

At The LatinVestor, we explore the Panama real estate market every day. Our team doesn't just analyze data from a distance—we're actively engaging with local realtors, investors, and property managers in cities like Panama City, Casco Viejo, and Punta Pacifica. This hands-on approach allows us to gain a deep understanding of the market from the inside out.

These observations are originally based on what we've learned through these conversations and our observations. But it was not enough. To back them up, we also needed to rely on trusted resources

We prioritize accuracy and authority. Trends lacking solid data or expert validation were excluded.

Trustworthiness is central to our work. Every source and citation is clearly listed, ensuring transparency. A writing AI-powered tool was used solely to refine readability and engagement.

To make the information accessible, our team designed custom infographics that clarify key points. We hope you will like them! All illustrations and media were created in-house and added manually.

What are current house prices in Panama City compared to last year?

As of September 2025, residential property prices in Panama City have increased by 2.38% compared to the previous year.

The average asking price for residential properties currently sits at $1,804 per square meter, with median home prices reaching approximately $337,645. This represents a significant long-term appreciation of 59.8% over the past five years, though the annual growth rate has moderated considerably.

Luxury apartments in premium neighborhoods like Casco Viejo and Punta Pacifica command prices above $4,000 per square meter and continue experiencing 2-4% annual growth. These high-end properties maintain stronger price momentum compared to the broader market.

In contrast, older residential units and detached homes have shown slower price appreciation or even slight declines in some cases. The median sale prices reported throughout 2025 have ranged between $323,917 and $384,000, depending on the specific data source and time period analyzed.

This price growth reflects a maturing market where premium locations and new developments continue to command strong valuations while older inventory faces more pressure.

How fast are houses in Panama City selling on average right now?

The average home in Panama City currently sits on the market for approximately 86 days before selling, representing a notable increase from the previous year.

This represents a significant slowdown compared to 2024, when properties typically sold within 54 days. Some market segments show faster movement, with certain listings going pending within 51-68 days, while "hot homes" in desirable locations can move even more quickly.

The increased time on market indicates a shift toward a more balanced market compared to the seller-favorable conditions of recent years. Buyers now have more time to evaluate options and negotiate terms, while sellers may need to adjust expectations regarding pricing and timing.

The slower pace particularly affects mid-range and older properties, while luxury developments and well-located new construction continue to sell more rapidly. Properties priced competitively and in prime locations still move within the faster timeframes, suggesting that quality and location remain critical factors.

This trend aligns with broader market conditions showing increased inventory and more selective buyer behavior.

What is the current supply of homes for sale in Panama City?

As of early 2025, Panama City has 16,519 new units available for sale, representing a 7.2% decline in inventory compared to the previous year.

Despite this year-over-year decrease, the market still experiences oversupply conditions, particularly in the mid-to-high-end segments. This oversupply situation affects pricing power for sellers and provides more options for buyers in certain price ranges.

The housing market faces a paradoxical situation with both oversupply and undersupply existing simultaneously. While luxury and mid-range segments show excess inventory, there remains a significant housing deficit of 140,000 units citywide, particularly affecting affordable and entry-level housing.

The oversupply primarily concentrates in newer developments targeting middle and upper-income buyers, while the shortage affects lower-income housing segments. This mismatch between supply and demand across different price points creates distinct market dynamics within the same city.

It's something we develop in our Panama property pack.

How many new housing units are under construction or planned in the city?

Several major luxury developments are currently under construction or in planning phases, signaling renewed confidence in Panama City's high-end residential market.

Project Name	Development Type	Status
The Residences	Luxury residential tower	Pre-construction phase
Sea Point Paitilla	Waterfront luxury development	Under construction
Ipanema	Major residential complex	Planning/pre-construction
Vervana	Mixed-use development	Planning phase
Various Casco Viejo projects	Historic district renovations	Multiple phases
Punta Pacifica towers	High-rise residential	Various stages
Government affordable housing	Subsidized developments	Active construction

What are the current mortgage interest rates in Panama and how have they changed recently?

Mortgage interest rates in Panama remain relatively stable as of September 2025, with local bank reference rates at 6.25% for Panamanian citizens.

Foreign buyers face higher borrowing costs, typically encountering rates between 7-9% depending on their financial profile and the lending institution. These elevated rates for non-residents reflect the additional risk assessment by local banks.

The government has expanded subsidized mortgage programs for homes valued up to $120,000, offering preferential rates as low as 4% for the first five years. New legislation in 2025 has made these subsidy programs permanent and enhanced their benefits, providing greater certainty for qualifying buyers.

These government-backed programs specifically target first-time homebuyers and middle-income families, helping offset affordability challenges in the market. The subsidized rates represent a significant discount compared to market rates and include reduced transfer costs.

Overall rate stability has been maintained despite global economic pressures, partly due to Panama's dollarized economy and the government's commitment to supporting homeownership through various financial incentives.

How much has household income in Panama City grown compared to housing costs?

Housing costs in Panama City have significantly outpaced household income growth, creating affordability challenges for many residents.

Rental prices have increased by 28% from 2019 to 2023, while wage growth has not kept pace with this rapid escalation in housing costs. This imbalance has become a core affordability issue affecting both renters and potential homebuyers.

The disparity between income growth and housing cost increases has forced many residents to allocate larger portions of their income to housing expenses. This trend particularly affects middle-income families who earn too much to qualify for government subsidies but struggle with market-rate housing costs.

Foreign income earners and expatriate professionals generally maintain better purchasing power due to USD-denominated incomes, which helps explain continued foreign demand in the premium market segments. Local professionals, however, face increasing pressure from housing cost inflation.

This income-to-housing cost gap represents one of the primary challenges facing Panama City's residential market and influences government policy decisions regarding housing subsidies and development incentives.

What are the latest population growth and migration trends for Panama City?

Panama City's metropolitan area population reached 2,055,000 residents in 2025, representing a 1.93% increase over 2024.

The city continues adding approximately 38,800 new residents annually, with most growth driven by net migration rather than natural population increase. This includes both domestic migration from other parts of Panama and international immigration.

Business opportunities and infrastructure investments serve as primary magnets for population growth. The city's role as a regional financial and logistics hub attracts professionals from across Latin America, while major infrastructure projects create employment opportunities.

International migration patterns show increasing numbers of Colombian and Venezuelan residents, along with growing expatriate communities from North America and Europe. These demographic shifts influence housing demand patterns and price dynamics across different neighborhoods.

The steady population growth provides fundamental support for housing demand, though the challenge lies in ensuring adequate housing supply across all income levels to accommodate this growth sustainably.

How has foreign investment in Panama City's real estate market changed over the past year?

Foreign investment in Panama City real estate has increased by 7% year-over-year, representing a growing share of new development activity.

1. **Colombian and Venezuelan buyers lead foreign investment**, driven by economic conditions in their home countries and Panama's stability2. **North American and European investors** continue showing strong interest in luxury and retirement-focused properties 3. **Investment focus concentrates on luxury and new-build segments**, with foreign buyers willing to pay premium prices for quality developments4. **Pre-construction sales attract significant foreign capital**, particularly in high-end projects like those in Punta Pacifica and Casco Viejo5. **Projected 25% growth in foreign investment through 2025**, indicating sustained international confidence in the market

It's something we develop in our Panama property pack.

What government policies or regulations are affecting the housing market right now?

The Panamanian government has implemented several new policies in 2025 designed to stimulate housing market activity and improve affordability.

Enhanced mortgage interest subsidies now apply to homes valued up to $120,000, with qualifying buyers receiving rates as low as 4% for the first five years. These programs have been made permanent, providing greater certainty for potential homebuyers.

Transfer costs and refinancing fees have been reduced through new legislation, making property transactions more affordable for both first-time buyers and existing homeowners looking to refinance. This policy directly addresses transaction cost barriers that previously deterred some buyers.

The government actively encourages affordable and mid-range development through various incentives, recognizing the housing deficit in these segments. Previously temporary incentives have been made permanent to provide developers with long-term planning certainty.

These policies specifically target the affordability gap while avoiding measures that might artificially inflate property values, striking a balance between supporting homeownership and maintaining market stability.

We did some research and made this infographic to help you quickly compare rental yields of the major cities in Panama 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 are rental prices in Panama City trending compared to home prices?

Rental prices in Panama City are rising much faster than home purchase prices, creating opportunities for property investors while challenging affordability for tenants.

Average rental costs currently stand at $1,950 per month citywide, with studios averaging $1,550 monthly. Rental prices have increased by 12% this year alone and have risen 28% since 2019, significantly outpacing the 2.38% annual home price appreciation.

This divergence between rental and purchase price growth creates attractive rental yields for property investors, particularly in well-located buildings with modern amenities. Central neighborhoods and high-amenity buildings command the strongest rental demand and pricing power.

The rapid rental price growth reflects strong demand from both local professionals and the growing expatriate community, while housing supply has not kept pace with demand in the rental segment. Foreign professionals and digital nomads particularly drive demand in premium rental properties.

This trend suggests that rental properties may offer better returns than property appreciation in the current market environment, making Panama City attractive for buy-to-rent investment strategies.

What do local real estate experts and banks predict for house prices in the next 12 months?

Local real estate experts and financial institutions predict continued moderate price appreciation of 1-2% annually in prime Panama City neighborhoods over the next 12 months.

The consensus forecasts a two-tier market development, where luxury properties and new construction in desirable locations continue experiencing steady price growth while older properties and oversupplied segments may see flat or declining values.

Infrastructure improvements planned for 2025-2026 are expected to support long-term price growth in targeted areas, particularly neighborhoods benefiting from transportation upgrades and urban development projects. These infrastructure investments create positive fundamentals for specific market segments.

Banking sector analysis suggests that government subsidy programs will continue supporting demand at the lower end of the market, while foreign investment maintains momentum in the luxury segment. This dual support system provides market stability across different price points.

It's something we develop in our Panama property pack.

What are the biggest risks that could push house prices down in Panama City soon?

Persistent oversupply in mid-to-high-end market segments represents the most immediate risk to Panama City property prices.

1. **Oversupply conditions in luxury and mid-range segments** could force price corrections if demand doesn't absorb existing inventory quickly enough2. **Affordability constraints affecting local buyers** may reduce domestic demand, particularly if income growth continues lagging behind housing costs 3. **External economic shocks** from US recession or broader Latin American economic downturns could reduce foreign investment and expatriate demand4. **Interest rate volatility** might affect borrowing capacity and buyer sentiment, despite current rate stability5. **Short-term rental restrictions** limiting Airbnb-type investments could reduce investor demand in certain segments

Currency risk remains minimal due to Panama's USD peg, but investor sentiment could shift if regional economic conditions deteriorate significantly. Changes in US immigration policies or economic conditions could particularly affect the large North American expatriate community that drives premium market demand.

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.

Sources

1. Global Property Guide - Panama Price History
2. The LatinVestor - Panama Price Forecasts
3. The LatinVestor - Panama City Price Forecasts
4. Redfin - Panama City Housing Market
5. Zillow - Beacon Beach Home Values
6. Trading Economics - Days on Market Data
7. Panama Equity - Q1 Market Report
8. Punta Pacifica Realty - Pre-Construction Projects
9. CEIC Data - Panama Lending Rates
10. Overseas Property Alert - Panama Market Update 2025