What happens to real estate prices due to the jump in the blue dollar

The year closes with exchange tension due to the rise of the blue Dollar and there are sectors sensitive to the price of the US currency that are on alert. 

In the real Estate market they remain attentive to what happens with the exchange rate, thinking about what can happen in 2023. 

“This is a special time for the movement of the blue (dollar), as it happens almost every year end. If we take a longer period, what we see is that the price follows the inflationary level,” the president of the Argentine Real Estate Chamber, Alejandro Bennazar, told MDZ. 

In recent months, the market has been showing signs of recovery and, to a large extent, this behavior was accompanied by greater exchange rate calm. The marginal jump in the Dollar in recent days could play against this trend, if it continues to be unstable, but in the short term it does not seem to have an impact. 

“Given the lack of credit, operations are carried out with people who have dollars, so the situation does not vary much. As this movement occurred very close to the end of the year, there will be no changes. What has not been done until now will not be done until after mid-January,” added the manager.

The aforementioned period is linked to the high holiday season, when the activity is paralyzed.

For now, the end of 2022 is encouraging as activity consolidates its recovery. The writing levels are already in the records of 2015 and 2016. They are even similar to 2019. The businessman estimated that there is little left to reach the peaks of 2017 and 2018, years that marked a peak in operations, driven by the appearance of credit. 

The situation in recent months is uneven, depending on the region of the country. In the City of Buenos Aires, where the highest concentration of real Estate is located, there is an increase in demand that is reducing the gap between the asking price and the offered price. 

“We came from counter-offer levels of 15% or more and now operations are closed with only 5% or less difference between what the seller is asking for and what the buyer is offering. That's a sign of a stronger market,” he added.

The explanation for this situation can be found, on the one hand, in the estimate by investors that property values ​​reached a floor. The other reason is the demand from buyers looking to acquire a property to convert it to traditional or temporary rental. This is justified by an improvement in the profitability of the location which went from 2% per year to more than 3.5% for two-year contracts. Double those levels if it is a temporary rental. 

Meanwhile, the recovery of the buying and selling market is perceived more strongly in some provinces.  

In this context, the outlook for the coming months is positive. 

"2023 is going to be a pivotal year in which this trend is going to be consolidated and a transition for the following year. Demand is going to increase. Surely, 2024 will be a good year in sales, recovering the volume of other years, and this will be reflected in an improvement in prices," Bennazar pointed out.

In the City of Buenos Aires, where the highest concentration of real estate is located, there is an increase in demand that is reducing the gap between the asking price and the offered price.