The revaluation, another bad news for a real estate market in crisis

The controversy over the revaluation of Buenos Aires properties comes in the midst of one of the worst crises in the real estate sector. “Any action that leads to more tax pressure right now is a bad sign for the market in general,” introduces Soledad Balayan, senior analyst at Maure Inmobiliaria. And she explains: “A tax increase implies less profitability and less investment incentives that feed the rental market.”

The connoisseurs maintain that beyond its concrete impact, the mere mention of a revaluation adds uneasiness to a business that is going through the collapse of sales and the lack of homes to rent, a trend that has increased the sanction of the Rental Law. Enacted in June 2020, the rule caused more harm than good. Balayan stresses that in Capital “there are only 6,000 apartments for rent, against the usual 9,300.” His colleague Armando Pepe, from the real estate company of the same name, says that this regulation, which extended the term of contracts and adjustments, is rejected both by the owners (“they prefer not to rent it”) as well as by the tenants (“because they don’t can pay”).

Gómez Picasso admits that it is not yet known what the impact of the revaluation will be. “That no longer matters – he remarks – because taxes go up all the time and affect almost all goods and services. For that reason, I think no one can say if fewer properties will be sold at this time, due to the depth of the crisis” , he concludes.

The Rental Law added to the exchange rate and the chronic instability of the dollar (the variable that sets the pace in the real estate business) produced a remarkable fact. Year after year, due to the lack of sales, stock was accumulated. All aggravated by the decision of many owners to withdraw their rental homes and put them up for sale. The consequences are plain to see and are reflected in all specialized stats.

According to a report by Fabián Achával Properties, in Capital there are almost 161,000 properties offered, a record. The stock has been increasing every year due to the scarcity of operations: 61,867 units (average from 2015 to 2018); 89,345 (2019); 122,815 (2020); and 132,167 (2021). Last year there was a slight recovery in the number of writes, but in contrast to 2020, when operations touched their historical low product of the pandemic.

Alejandro Bennazar, president of the Argentine Real Estate Chamber, is blunt. When asked about the eventual impact of the real estate revaluation, he interpreted that “any negative news affects the market.” And he gave a concrete example: “If someone was planning to buy, or was about to do so, when he hears about a tax increase, he desists from doing it. Even if you don’t know what it is about.”

Along with the low number of operations, property prices have been falling. The law of supply and demand is inexorably fulfilled. “In 2021, prices fell on average 7.7% compared to the previous year. But it represents a drop of 23.3% compared to 2019,” says the Achával study. There are several factors that affect the lack of operations, including the exchange rate, the absence of mortgage loans and the rise in the dollar. “The real estate market began with the worst historical record of deeds for a month of January,” says the report.

By Editor

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