Peru

The Peruvian housing market has emerged from the global crisis quickly, as has the economy.  In July 2010, GDP was up 9.05% from the same period last year, according to the Central Reserve Bank of Peru (BCRP).

In the second quarter of 2010, the average price of homes sold in Lima Metropolitan Area was was up by 4.4% to PEN 293,585 (US$105,228) on the previous quarter, according to the consultancy Peru Tinsa.

The average sales price of homes is projected to rise by up to 8% in 2010, according to Banco Bilbao Vizcaya Argentaria (BBVA) Research.

Land prices have been soaring in recent years. In the first quarter of 2010, land prices rose by 8% from a year earlier, according to the Peruvian Chamber of Construction (CAPECO).

Sales of existing homes are expected to continue to rise in the coming months, fuelled by robust economic growth, rising employment, and recovery of private investment. In addition, housing demand is predicted to grow in the medium term, as income rises, mortgage financing becomes more available, and the middle-aged population (30 to 40 years) continues to expand.

Foreigners can freely buy properties in Peru. Real estate investments do not need prior approval from the governments except for properties near the borders. Foreigners, however, tend not to be attracted to buy in Peru.

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Read Taxes and Costs  »

Read Buying Guide  »

Read Landlord and Tenant  »

Peru has a rich and varied cultural and architectural heritage, with some of the most spectacular and varied scenery in South America. Tourists are attracted to Macchu Picchu and Cuzco, the ancient capital, and to Lake Titicaca, the world’s highest navigable lake. Millions of highland Indians still speak the ancient tongue of Quechua and maintain a traditional way of life.

However, Peru’s development has been held back by endemic corruption and the failure of successive governments to address the problems of social and economic equality. GDP per capita is around US$4,356 in 2009.

2006 was a pivotal year. Confidence was low in anticipation of the return to power of Alan Garcia, who had presided over a directionless and high-spending leftist government during his first term as president (1985-1990).

However, when Garcia returned in July 2006, he seemed a reformed man, determined not to repeat the mistakes of his first administration.

Fiscal rectitude became the government’s No 1 priority. Garcia saw how Chile’s restrained state spending won it lower credit costs from the international lenders, and followed the same route. The overall surplus of Peru’s non-financial public sector jumped to 3.1% of GDP in 2007, up from 2.1% of GDP in 2006 – the biggest budget surplus for 30 years.

Savings began to rise. As the economy improved, the international credit rating agencies upped their ratings and the cost of Peru’s debt-service dropped. In April 2008 Fitch Ratings gave Peru a rating of BBB-, the only Latin country aside from Chile and Mexico to have an investment grade rating, allowing more pension funds and insurers to buy Peru's debt, driving spreads down to record lows.

The current account and the trade account are both in healthy surplus. Remittances are strong. Finally, Garcia has made Peru the first Andean country to secure a free trade agreement with the United States He has also signed free trade agreements with Canada and Singapore.

The Peruvian economy grew by an average of 8.8% from 2006 to 2008. In 2009, the economy barely grew, with GDP growth rate at just 0.9% due to the global crisis. Growth is expected to return in 2010 at around 8%.