CLOSE X

Register - if you don't have an account

Yes! Sign me up for Global Property Guide's fortnightly email newsletter.


Login - for registered users

Forgot Password?
Explore destinations
continent map couldn't be loaded Pacific Europe & Russia North America Latin America Asia Africa Middle East Caribbean

 


Financial Overview

Directory

Property Search

Global Statistics

Regional Statistics






Last Updated: Aug 20, 2015




House prices in Mexico rose by 6.38% during the year to Q2 2015. When adjusted for inflation, house prices were up by around 3.35%, based on figures from Sociedad Hipotecaria Federal (SHF). This followed 4.9% (1.78% in real terms) y-o-y growth in Q1 2015, revised from a preliminary 0.61% (-2.68% in real terms) y-o-y growth estimate by SHF.

Mexico's real estate market has been buoyed 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 several-year slump, thanks to low oil prices and the strong US dollar, pushing home values up.

American buyers are very important as owners of beachfront properties, which were badly affected by the slump of 2009-10 in areas like Baja California Sur, Nayarit, Baja California, Guerrero and Sinaloa.

However there is also an enormously strong domestic market. 

Mexico house pricesMexico's most expensive houses are in the municipalities of San Pedro Garza Garcia in Monterrey Metropolitan Area, in Zapopan in Guadalajara Metropolitan Area, and in Acapulco, according to Lamudi’s Q1 2015 report. High-end apartments cluster in Miguel Hidalgo municipality in Mexico City, San Pedro Garza Garcia in Monterrey, and Huixquilucan in Mexico State.

The Mexican market is not driven by speculators. There are many developers, it is highly competitive. Much new housing is built, which keeps prices down. Interest rates are (relatively) low in the social sectors, due to subsidies. Home prices in Mexico rose by 6% annually between 2005 and 2011, slightly above inflation, according to SHF’s home price index.  The last big housing crisis occurred after the Tequila crisis of 1994, when a currency devaluation followed by interest rates spiking caused 40% of all bank loans to default. Since then, there has been continuous recovery.

Analysis of Mexico Residential Property Market »


RENTAL YIELDS
Last Updated: Nov 20, 2015



Gross rental yields in Mexico City - the return earned on the purchase price of a rental property, before taxation, vacancy costs, and other costs - are moderately attractive. Gross rental yields are an important consideration even for those who do not intend to become landlords, because a high rental yield indicates that the property market is reasonably priced.

Gross rental yields in Mexico are moderate, at between 4.9% to 5.4%. To buy a 120 square metre (sq. m.) apartment in an upscale area of Mexico City costs around USD 3,000 per sq. m., or USD 350,000 - a not unreasonable price.

Read Rental Yields  »



TAXES AND COSTS
Last Updated: Apr 11, 2016



Rental Income: Nonresident individuals are generally liable to pay 25% withholding tax on their gross rental income.

Capital Gains: Nonresident individuals selling Mexican property are generally liable to pay 25% withholding tax on the sales price. However, nonresident individuals with appointed local representatives may be taxed on their net capital gains (sales price less acquisition costs and related costs) at 30%.

Inheritance: There are no inheritance taxes in Mexico.

Residents: MexicanResidents must pay income tax on their worldwide income at progressive rates, from 1.92% to 35%.

Read Taxes and Costs  »



BUYING GUIDE
Last Updated: Apr 12, 2016



The total roundtrip transaction costs are around 4.61% to 11.17% of the property value, depending upon the location, and value of the property. Property acquisition tax, notary public fees and registration fees vary in each state and/or city.

Additional costs for the buyer include title insurance, legal fees for Spanish-speaking lawyer, bank fees for setting up a trust (fideicomiso), and permit from the foreign affairs office. Real estate agent’s fee is around 3% to 6% (plus 16% VAT) and typically paid by the seller.

Read Buying Guide  »



LANDLORD AND TENANT
Last Updated: May 31, 2006



Mexico landlord & tenant law is pro-tenant.

Rent Control: The rent freeze imposed in Mexico City in 1948, and lifted only in 1992, have driven investors out of the rental sector or to the informal rental market. Rent increases are generally tied to the consumer price index.

Tenant Security: The law favors the tenant and it is difficult for the landlord to evict the tenant upon the termination of the contract.

Read Landlord and Tenant  »



ECONOMIC GROWTH
Last Updated: Aug 20, 2015


Slower-than-expected growth in 2015

Mexico gdp growthDuring the second quarter of 2015, Mexico’s GDP decelerated to 2.2% y-o-y growth, lower than the 2.6% y-o-y economic expansion in Q1 2015, according to the Instituto Nacional de Estadística y Geografía (INEGI). The slower growth was caused by weaker agricultural and industrial sectors as compared to the first quarter.

After a 4.7% GDP contraction in 2009, Mexico grew by 5.1% in 2010 as export demand picked up, specifically from the United States. This was followed by good years in 2011 and 2012 (both with 4% growth).

Mexico’s economy is highly dependent on the US, and in 2012, 78% of Mexico’s exports went to the US.  2013 was a disappointing year with 1.4% GDP growth, but in 2014 there was 2.1% GDP growth.

Mexico’s 2015 economic growth outlook was reduced to a range of 1.7% to 2.5% by the central bank, Banco de Mexico (Banxico).  BBVA Research reduced its growth forecast to 2.5% from 3.5%, citing three factors for its lower growth prediction:
  • Oil production’s downward trend;
  • The level of dynamism in manufacturing exports is lower than expected; and
  • Public sector consumption and investment’s contribution to growth were also lower than expected.







  • High yields for luxury units
  • Moderate transaction costs
  • Low to moderate income taxes
  • Pro-tenant rental market
RESIDENTIAL PROPERTY FACTS
Price (sq.m): $2,917 For a 120 sq. m. property, usually an apartment.
Rental Yield: 5.44% For a 120 sq. m. property, usually an apartment.
Rent/month: $1,588 For a 120 sq. m. property.
Income Tax: 25.00% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 7.89% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: 25.00% Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Pro-Tenant Rating is based on a detailed study of each country’s law and practice.

News & Discussion



Free Newsletter

Fortnightly updates from the global property arena directly to your inbox.


Email Address:





Connect to professional advice in Mexico





PROPERTY RECOMMENDATIONS

 
Download free property reports from international research houses

Our Newsletter

 
Fortnightly updates from the global property arena directly to your inbox.

Manage subscriptions
Chinese property buyers and Asian buyers, there is great property for high net worth Chinese buyers on Juwai.com

Which parts of the world are most attractive for property investment today?

Click here to see our Latest Investment Offers!

Close Me