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Peru's housing market in September 2025 presents a complex picture for potential property buyers and investors.
While nominal house prices have shown modest growth over the past decade, real inflation-adjusted gains have been minimal outside Lima's premium districts, creating a relatively balanced market environment that favors informed buyers over speculative investors.
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 have experienced modest nominal growth of 3-7% annually over the past decade, but real inflation-adjusted prices have declined since 2020 in most areas except Lima's premium districts.
The market faces a supply shortage with construction lagging behind demand, moderate mortgage rates averaging 7.44%, and strong rental yields around 6% nationally, creating a balanced environment with limited short-term price volatility expected through 2026.
| Market Factor | Current Status (Sept 2025) | Impact on Prices |
|---|---|---|
| Price Growth (10-year) | 3-7% nominal, declining real growth | Neutral to slightly negative |
| Supply vs Demand | Construction lagging, 6% annual deficit growth | Upward pressure |
| Mortgage Rates | 7.44% average, stable trend | Neutral |
| Rental Yields | 6% national, 6.4% Lima | Supportive for investors |
| Foreign Investment | Strong in Lima premium areas | Upward pressure (selective) |
| Economic Growth | 3.1% GDP forecast, 1.7-2.2% inflation | Positive fundamentals |
| Expert Forecast | 3-7% nominal growth through 2026 | Stable appreciation |
What have house prices in Peru done over the past 5 to 10 years?
House prices in Peru have shown modest nominal growth of 3-7% annually over the past decade, but the real story is more nuanced when you account for inflation.
The national house price index reached 176.54 in Q1 2025, near its all-time high, but real inflation-adjusted growth has actually declined since 2020. In Lima's most desirable districts like Miraflores and San Isidro, prices have risen faster at 8-12% in some areas, while the broader national market shows stability with occasional dips.
This means that while property values have increased on paper, their purchasing power relative to other goods and services has remained relatively flat or even decreased in many areas. The strongest price appreciation has been concentrated in Lima's premium neighborhoods, driven by limited supply and strong demand from both domestic and foreign buyers.
As of September 2025, year-over-year real price growth has slowed to below 1% nationally, indicating a market that has largely reached equilibrium between supply and demand pressures.
How fast are new homes being built compared to the number of people needing housing?
Peru faces a significant housing shortage, with new home construction failing to keep pace with growing demand, especially in fast-expanding urban areas.
In cities like Arequipa, the housing deficit has been growing at approximately 6% per year, and demand is projected to surge 15% in 2025 alone. Nationwide, the supply of affordable homes is not keeping pace with urban migration and demographic pressures as people move from rural areas to cities seeking better economic opportunities.
The construction industry struggles with regulatory bottlenecks, limited access to affordable land in prime locations, and financing constraints for developers focusing on mid-to-low income housing. While luxury developments in Lima continue to be built at a steady pace, the gap in affordable housing widens each year.
This supply-demand imbalance creates upward pressure on prices, particularly in emerging urban centers and areas with good infrastructure connectivity. The government has recognized this challenge and is implementing programs to accelerate permit processes and incentivize affordable housing development.
How much are average household incomes and wages growing compared to housing costs?
Average monthly wages in Peru reached a record 2,172 PEN in June 2025, showing steady growth but at a pace that struggles to match housing cost increases in prime areas.
While national incomes have grown consistently, wages have increased at a slower pace than house prices in Lima's top districts. This creates an affordability challenge, particularly for younger buyers and those in lower-income brackets who find it increasingly difficult to access homeownership in desirable areas.
The wage-to-housing cost ratio has become more stretched in Lima's premium neighborhoods, where prices have outpaced income growth by 3-5 percentage points annually. However, in secondary cities and rural areas, income growth has been more aligned with housing cost increases.
It's something we develop in our Peru property pack.
This income-housing cost divergence explains why government subsidies and affordable housing programs have become increasingly important for maintaining homeownership accessibility for middle-class Peruvians.
What are the current mortgage interest rates and how likely are they to change?
Mortgage rates in Peru are currently averaging 7.44% as of June 2025, which represents a decrease from recent peaks.
Most analysts expect rates to remain stable or decrease slightly due to subdued inflation running at 1.7-2.2% and a steady central bank policy rate maintained at 4.5%. The Central Bank of Peru has signaled a cautious approach to monetary policy, prioritizing price stability while supporting economic growth.
For foreign buyers, mortgage rates typically range from 7-11% depending on loan terms, down payment size, and the financing source. Local banks generally offer better rates to residents with established credit histories and employment in Peru.
The relatively moderate rate environment, combined with stable inflation expectations, suggests that financing costs are unlikely to create significant additional pressure on the housing market through 2026. However, any unexpected economic shocks or changes in global financial conditions could influence this outlook.
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How accessible are loans right now, and are banks tightening or loosening credit conditions?
Access to loans in Peru remains fair to good, with banks maintaining strong capital positions and risk management controls.
Interest rate caps implemented by regulators have made credit somewhat harder to access for riskier borrowers, but qualified applicants with stable income and good credit histories can still obtain financing relatively easily. Banks are maintaining prudent lending standards while competing for quality borrowers.
Social housing programs continue to expand eligibility and funding, providing additional financing options for first-time buyers and those purchasing properties under certain value thresholds. Programs like "Techo Propio" and "MiVivienda" offer down payment assistance and favorable interest rates.
Foreign buyers typically need to provide larger down payments (30-40%) and demonstrate income sources, but access to credit remains available for qualified international purchasers. Banks have not significantly tightened or loosened conditions recently, maintaining a balanced approach to lending.
How many properties are currently for sale compared to historical averages?
The inventory of properties for sale in Lima is moving faster than in previous years, with the average time to sell reduced to 22 months, down from a 25-month average between 2020-2025.
Overall available inventory remains high compared to historical norms, suggesting a more balanced market where buyers have reasonable selection without facing severe shortages. This inventory level indicates neither a buyer's nor seller's market, but rather a relatively equilibrated environment.
In Lima's premium districts, inventory moves more quickly due to strong demand from both domestic and international buyers. Secondary cities show higher inventory levels with longer selling times, reflecting more localized demand patterns.
The balanced inventory situation contributes to price stability, as neither excessive scarcity nor oversupply is driving dramatic price movements in most market segments.
What is the rental market doing, and are rents rising or falling relative to house prices?
Peru's rental market shows strong fundamentals with yields averaging nearly 6% countrywide and 6.4% in Lima as of September 2025.
Rents have risen modestly but not as quickly as property values in Lima's top neighborhoods, causing rental yields to drop slightly in those premium areas. However, in emerging areas and secondary cities like Arequipa, rents are rising due to supply constraints and growing demand.
The rental market benefits from Peru's growing urban population and increasing number of young professionals who prefer renting in city centers rather than purchasing in distant suburbs. Tourist areas like Cusco also see strong rental demand from both long-term residents and short-term vacation rental markets.
Overall, rental prices and yields remain stable or are rising slightly relative to house price growth, making Peru an attractive market for buy-to-let investors seeking steady income returns.
How strong is demand from foreign buyers and investors in Peru's housing market?
Foreign investment in Peru's real estate market remains robust, particularly concentrated in Lima's Miraflores and San Isidro districts and tourist destinations like Cusco.
| Location | Foreign Buyer Activity | Primary Buyer Profile |
|---|---|---|
| Lima - Miraflores | High | US, European investors |
| Lima - San Isidro | High | Business executives, expats |
| Cusco | Moderate-High | Tourism investors, retirees |
| Arequipa | Moderate | Regional business investors |
| Coastal areas | Moderate | Vacation home buyers |
Peru allows full property ownership by foreigners with minimal restrictions (some limitations exist near border areas), making it attractive for international investors. Recent infrastructure upgrades, including airport expansions and road improvements, have further attracted outside buyers.
However, periodic political uncertainty can temper demand in the luxury segment, as international buyers tend to be more sensitive to political stability than domestic purchasers.
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.
What is the country's overall economic outlook, including GDP growth and inflation?
Peru's economic fundamentals remain strong with GDP growth forecast at approximately 3.1% for 2025, positioning it among the fastest-growing economies in Latin America.
Inflation is well-controlled at 1.7-2.2% and remains within the central bank's target range, providing price stability that supports both consumer confidence and real estate investment decisions. The Peruvian sol has appreciated slightly against the US dollar, benefiting foreign investors.
Employment conditions are improving, with job creation concentrated in urban areas where most real estate development occurs. The mining sector continues to drive export revenues, while services and manufacturing sectors show steady growth.
Political stability has improved compared to previous years, though the 2026 elections introduce some uncertainty. Overall, the economic environment supports moderate real estate price growth without creating bubble conditions.
How are government housing policies, subsidies, or tax incentives shaping the market?
Government housing policies in Peru are actively supporting market accessibility through expanded subsidized housing programs targeting low and middle-income buyers.
Key government programs include:
- "Techo Propio" - provides down payment grants for first-time buyers
- "MiVivienda" - offers interest rate subsidies and guarantees
- Down payment assistance covering up to 20% of property values
- Preferential interest rates for qualified buyers
- Regulatory reforms to accelerate construction permits
These programs specifically target affordable housing segments and aim to boost supply in urban areas where demand is highest. Regulatory reforms are being implemented to streamline the permit process and reduce construction timelines.
Tax incentives for developers focusing on affordable housing and infrastructure improvements in emerging neighborhoods are also being utilized to encourage private sector participation in addressing the housing shortage.
It's something we develop in our Peru property pack.
What do real estate experts and analysts forecast for the next 1 to 3 years?
Real estate analysts expect Peru's housing market to remain balanced through 2026, with nominal price growth of 3-7% in Lima and 5-9% in emerging cities like Arequipa and Trujillo.
Real inflation-adjusted price gains will likely remain minimal without faster wage growth or significant political and economic improvements following the 2026 elections. Areas with strong infrastructure connectivity are expected to see the highest demand and price appreciation.
The consensus view suggests that Peru's market will avoid both dramatic price increases and significant declines, maintaining stability that favors long-term investors over speculators. Well-connected infrastructure corridors and areas benefiting from mining-related development are identified as having the strongest growth potential.
Experts emphasize that market performance will depend heavily on continued political stability, successful implementation of housing policies, and Peru's ability to maintain its economic growth trajectory relative to regional peers.
How do property prices in Peru compare with similar countries in the region right now?
Compared to regional peers, Peru's house prices have risen at a more moderate pace, with annual increases of less than 3% compared to much higher growth in neighboring countries.
| Country | Annual Price Growth | Market Characteristics |
|---|---|---|
| Peru | 3% (moderate) | Stable, balanced market |
| Colombia | 11% (high) | Rapid appreciation, potential overheating |
| Mexico | 9% (high) | Strong foreign demand, tourist areas |
| Brazil | 6% (moderate-high) | Urban centers driving growth |
| Chile | -2% (declining) | Market correction, economic challenges |
Peru's market is viewed as moderately valued with solid rental yields and fundamentally safer conditions compared to markets showing rapid price appreciation. This positioning makes Peru attractive for conservative investors seeking steady returns rather than speculative gains.
The country's stable political environment relative to some neighbors, combined with strong economic fundamentals, positions Peru as a relatively low-risk real estate investment destination in the Latin American context.
It's something we develop in our Peru property pack.
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 housing market in September 2025 presents a balanced environment with moderate growth prospects that favor informed buyers over speculative investors.
While significant price declines appear unlikely given strong fundamentals and supply constraints, dramatic price increases are equally improbable without major economic or political catalysts, making Peru an attractive market for long-term property investment and residential purchases.
Sources
- The Global Economy - Peru House Price Index
- CEIC Data - Peru House Prices Growth
- The LatinVestor - Peru Price Forecasts
- The LatinVestor - Peru Real Estate Market
- Trading Economics - Peru Wages
- The Global Economy - Peru Mortgage Interest Rate
- Trading Economics - Peru Interest Rate
- Global Property Guide - Peru Rental Yields
- BBVA Research - Peru Economic Outlook March 2025
- Nearshore Americas - LATAM Property Prices
-Peru Real Estate Market Analysis