Argentina ended the housing boom, why do not prices fall?

Argentine real estate boom ended, why should not prices fall? May 4, 2009 In January 2006 I decided to find a home to purchase. Did not have much money saved, and yet was not even a bank loan approval for such an adventure. Believe me, the search really became an adventure, because while I was in the process of search (a search that lasted more than six months looking at over a hundred houses), the same prices increased steadily. Fortunately, in July of that year I was able to find the right house and after a little over three months in November had ended with the approval of bank credit and the purchase closed. He was convinced that home prices would continue with its strong upward trend not only in the context of living inflationary Argentina, but by strong demand for watching the industry, and I was right. Today the home that is purchased at a value of almost 2.5 times what I paid. After the final decree crisis model of convertibility in Argentina, Argentine real estate sector experienced a boom that clearly ended a few months ago.

This sector was among the first to be recovered after the 2002 crisis and its logic, among other reasons, was determined by the consequences of what became known as the "financial corral? limiting withdrawals of deposits from the local financial system. Today in the Argentine real estate market, the reality seems to be quite different, partly because of the effects of external crises (although in Argentina the topic of subprime crisis was not present, other effects on the real economy are deteriorating global being felt), but also by the internal uncertainty experienced by the economy and that is causing the Argentines prefer to take refuge in the dollar before the bricks. According to "Diario Hoy? two of the main causes that have led to the collapse of real estate is the fear caused by the economic crisis and political speeches apocalyptic-like Nestor Kirchner, Argentina's former president who continues to operate politically. The government has done its part in adding to the economic uncertainty, saying that if is defeated in parliamentary elections, which comes to the country is nothing but chaos.

The numbers in the housing market in most major urban centers in the country speak for themselves. According to a report of the Chamber of Notaries of Buenos Aires, during the first quarter of this year the movement of real estate sale in the province of Buenos Aires fell by 49%. In the Federal Capital, real estate sales plummeted 53.5% (although according to industry experts say, in March it began to see some recovery), reaching its lowest level since February 2002. In the city of Mar del Plata, the fall in sales was 41.7% at the end of the first quarter. What may seem strange in the housing market situation is that as demand shrinks, prices show a downward behavior. This has an explanation and links to context: the great uncertainty that exists in the local economy, sell your property without a clear destination for the money derived from the operation, appears as a highly risky bet that they are only willing to accept those who are in a situation of need. A clear reflection of what happens in the real estate sector is provided by the construction sector, according to data from the National Institute of Statistics and Census (INDEC), the March contract again by 2.4% to their seasonally adjusted, keeping downward expectations for the coming months.

Unfortunately, if one refers to the INDEC, in recent times doubts should discuss the quality of information. And this is not the case as from the private sector maintains that the contraction of the sector is larger and reaches to 17.8% in annual terms (according to the Build index, developed by 12 leading companies.) Estate entrepreneurs, are still waiting to see at least one dollar from the money laundering scheme launched by the Argentine government. This affirms the proprietor of the House Argentina Real Estate, who said Nestor Walenta since the rules took effect in money laundering transactions with funds from abroad were "slim to none?. It really sounds to smiling and thinking that a plan could achieve any results as: Who would ever bring Argentina's capital in this context as volatile and uncertain blindness mainly caused by the conduct of economic policy? The reality is that the dollars are leaving the country without intent to return (at least for a long period). The problems in the local housing market responds to several factors, one of which is lack of funding.

The lack of mortgage credit has been a constant problem in the housing market and worsened in this time of crisis. I think I'm one of the lucky few to have agreed to bank financing. Banks do not want to mortgage lending, but also not intended to sue the family. The lack of mortgage credit is a problem that will be felt most clearly when signs of recovery emerge in the sector. The weak demand in the sector, is deepened by the decision of those who have savings to look to the dollar. Is that the high probability that the dollar continues its upward trend means that many savers tip over into the currency as in previous episodes was a very good shelter for savings of Argentines. The property market in Argentina is going through a period of depression, which no doubt will continue at least until the end of the legislative elections and go clearing the local context (despite the fact that signs of recovery are mentioned in the last month). But it will not guarantee that you can spot a subsequent recovery, but also have to wait for the evolving global economic crisis.

Can the government do something to help the industry recover? Clearly yes, and that you can do is seek to provide stability and predictability to the local economic context. There is still a large potential demand in the sector that is waiting to know what can happen with the economy in Argentina and mainly with their own finances.