2023-07-06 14:23:24
The rental market continues to show signs of distortion. This month marks three years since the implementation of the current rental law and around 12,800 contracts will come to an end. The data from a survey carried out by the Sole College of Real Estate Brokers of the city of Buenos Aires with a base carried out by more than 9000 real estate agents. Of that number, only 60 percent will be renewed under the validity of the current norm”, affirms Marta Liotto, president of the entity.
The studios fail to reach the three-year contract. Patricio Pidal/AFV
A key piece of information from the report is that not all the contracts that will be terminated reached their full term, since some, such as studio apartments, did not exceed three years.
The rental law, implemented with the aim of mainly benefiting tenants and owners, ended up harming both parties. Now, as these first contracts under the new law come to an end, the owners are looking find a way to extricate themselves from this complicated situation in which the norm caught them. Some chose to extend the initial contract -signed before the new norm- to maintain the two-year term and the semi-annual adjustments, while others closed private agreements with family and friends as tenants. There were also those who decided take the property off the rental market to put it up for sale or leave it empty, which generated a reduction in the supply of available rentals.
40% of the contracts that end in July will not be renewed.JULIAN BONGIOVANNI
Another fact that Liotto shares is that of the 40 percent of the owners who seek to “escape” the new law, between 10% and 15% chose to “recover” the property for a relative or allocate it for sale, while that another 25% will choose to extend the contracts for 6 months. The term is not accidental. “They are owners who are awaiting the results of the elections and waiting for the proposals to repeal the law by the candidates,” he affirms, adding that all these aforementioned contracts were carried out under the current law, since the corresponding the previous law has already expired.
To reverse this panorama, Liotto insists that a law that establishes a two-year term – and not three like the current one – would generate greater predictability for the owners.
In some neighborhoods of the city, the supply of rental properties is practically nil.Luis Robayo – AFP
When the law was enacted in 2020, there were 84,000 apartments for sale, and 10 months later, that number increased to 104,000 in the city of Buenos Aires. During that same period, rents decreased from 9700 to 8500, despite the fact that the historical average is 15,000. These data arise from the surveys carried out by Zonaprop, a platform that currently publishes only 5,442 apartments for rent.
Meanwhile, real estate brokers anticipate that the rental market is heading towards a situation of “zero rents”. In fact, in some neighborhoods of the city, such as Agronomía and Versalles, the supply of rental properties is practically nil or limited to less than five units.
In numbers, the latest Zonaprop survey indicates that The rent for a 2-room apartment in the city is $158,328 per month. In June rose 11.2%; for the second consecutive month, a record monthly increase since the beginning of the series in March 2012. In 2023 rental prices accelerated their march: they accumulate 70.4%, almost double the increase registered in the same period of 2022 ( +37.7%). Palermo is the most expensive neighborhood, with an average price of $205,483 per month and Liniers is the cheapest with $114,447.
Two months ago, during a lunch between Massa and Alberto Fernández, both agreed that “the law no longer allows for more.” Rodrigo Nespolo – LA NACION
This crisis has become a kind of snowball that continues to grow and nobody knows when or how it will stop. Despite the fact that 23 projects were presented and two opinions were reached, no political force managed to generate the necessary consensus to approve a new law. In addition, the subject has not been included in the agenda of extraordinary sessions. Two months ago, during a lunch between Massa and Alberto Fernández, both agreed that “the law no longer allows for more” and the possibility of repealing it was raised again. The inaccessibility of rentals continues to be an issue that enters and leaves the public agenda according to political interests, with concrete repercussions in the market, which is paralyzed every time the possibility of repealing the law is raised.
The choice of what to do with the property will depend on the needs of each owner, but Soledad Balayan, director of Maure real estate, explains that the advantage of selling is “the flexibility that implies not having to take care of the property, the liquidity it provides and the possibility of using the money for another investment alternative”. Although it clarifies that we are still in a low price market.
Real estate transactions increased for the first time in three years, indicating a possible turning point.Hernan Zenteno – La Nacion/Hernan Zenteno
In any case, the good news for those who decide to “get out of the contracts” and allocate the property to the sale market is that the sale prices show encouraging signs of recovery, especially in the used apartments segment. The key data is that the closing prices of real estate transactions in the city of Buenos Aires increased for the first time in three yearssignaling a potential turning point in the precipitous drop in sales values since 2019.
The interannual increase in the first 90 days of the year was 3.6%, according to the data extracted from the Survey of Real Estate Operations (ROI) that is made up of qualitative and quantitative information from 26 real estate companies in the market. The increase marks a significant milestone, as it is the first data in three years that shows strong growth in closing prices.
But perhaps the most significant information is that the preliminary results for the current quarter confirm the trend: “The data for the second quarter also seems to point in the same direction, although they are not yet closed”, clarifies Fabián Achával, owner of the homonymous real estate agency. This reinforces the idea that prices touched a floor and could begin to recover more solidly in the coming months.
Experts consider that this possible recovery in the real estate market is a matter of debate that depends on several factors: from seasonality – it is a quarter in which fewer operations are usually closed – to the heterogeneity in the different neighborhoods and segments. “For this reason, this current quarter will be key,” Achával clarifies.
Conocé The Trust Project
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