What is Happening With Mexico’s House Prices?
Mexico’s house prices were up 2.3 percent year on year in December 2021, with a median price of $179K. Homes in Mexico sell in 33 days on average, compared to 57 days last year. This year, three residences were sold in December, compared to five previous years. Even though some properties receive several different bids. The typical house sells for around 3% over the asking price. Some residences may sell for around 7% more than the asking price and go pending in about 8 days.
Mexico’s House prices rose by 1.08 percent year-on-year in Q3 2020.
The housing market in Mexico has remained steady, with the national home price index climbing 2.73 percent in the year to Q3 2021, following a 1.08 percent increase in Q3 2020. The housing market has gradually improved in recent years, with yearly actual home price increases of 3% on average from 2016 to 2020.
House prices rose sharply by 4.32% in 2018 and 4.58% in 2019. For ten years, Mexico’s housing market had barely moved. It was a pattern of almost total stability, possibly reflecting Mexico’s highly competitive construction industry. In 2009, house prices rose 0.77 per cent (inflation-adjusted), in 2010 they dropped 0.59 per cent, in 2011 + 2.37 per cent, in 2012-1.15 per cent, in 2013 + 0.39 per cent, in 2014 + 0.84 per cent, in 2015 + 4.36 per cent, in 2016 + 4.07 per cent, and in 2017 + 0.73 per cent, all inflation-adjusted.
The luxury market is driven by both foreign and domestic demand
Mexico’s real estate market has been spurred on by strong demand in resort communities, according to the International Consortium of Real Estate Associations (ICREA). American and Canadian buyers are returning to Mexico after a few years of slump, thanks to low oil prices and a strong US dollar, pushing home values up.
The rising middle class of Mexico continues to boost the housing market. The middle class of the country was estimated to account for almost half of the total households, at 14.6 million. They are expected to continue to grow, with an estimated 3.8 million more households expected to move into the middle class by 2030. However, the ongoing pandemic is causing a temporary fall in demand for housing, resulting in a slowdown in house prices.
Rents, rental income: moderate yields from 4.9 to 5.4 percent.
The cost of apartments in Mexico City is reasonable at around $3,000 per square meter. Mexico’s GDP rose by 5% in 2021, yet the year ended in a recession. Mexico’s economy increased by 5% in 2021 but entered a technical recession at the end of the year, as Latin America’s second-largest economy declined for the second quarter in a row, according to preliminary government figures released Monday. Capital Economics stated that the statistics “indicated that the economy slid into a recession throughout the second half of 2021, and we believe growth this year will be less than most forecast.” GDP declined by 0.1 percent in the three months to December from the previous quarter, when the economy shrank by 0.4 percent, according to the national statistics organization INEGI. A technical recession is defined as two consecutive quarters of declining GDP. According to central bank analysts polled, the GDP would rise by 2.7 percent in 2022.