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Mexico's housing market is slowing sharply

Oct 12, 2017 | 0 Comment(s)


Trend: house prices rose 0.73% y-o-y in Q2 2017
Mexico’s housing market is slowing sharply. Weak demand is caused by uncertainty about U.S. economic policies, combined with worries about corruption and violence. 
 
For a decade the housing market has hardly moved. In 2009, house prices rose 0.77% (inflation-adjusted),  in 2010 it fell 0.59%, in 2011 + 2.37%, in 2012 -1.15%, in 2013 + 0.39%, in 2014 + 0.84%, in 2015 + 4.36%, and in 2016 + 4.07%, all inflation-adjusted.  
 
The Mexican economy is weak.  It grew by 2.8% in Q1 2017 from a year earlier, up from 2.3% growth the previous quarter, according to the Instituto Nacional de Estadistica y Geografia (INEGI). 
 
Analysis: Demand is falling. 
Urban housing transactions fell 6.1% in 2016, according to the Housing Finance Information Network (HOFINET). Construction activity is slowing. Housing completions fell by 4% in 2016. 
 
Rents, rental yields: yields data are not available in Mexico
Mexico City apartments are inexpensive at around $1,852 per sq.m. 
 
Mexico: city centre apartment, buying price, monthly rent (120 sq.m.) 
   Buying price  Rent per month  Yield
 Mexico City  €222,240  n.a.  n.a.
 
Recent news.   The central bank Banco de Mexico (Banxico) raised its key rate by 25 basis points to 7% in June 2017 – the highest level in eight years.  The average interest rate offered by banks and Sofoles was 13.3%.
 
The economy is expected to expand by between 1.5% and 2.5% this year. 

 






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