Sales prices and rents in the Mexican housing market continue to grow, driven by persistent supply shortages, domestic demographic factors, and sustained interest from foreign buyers, while the economic slowdown and US policies add uncertainty to the outlook.

This extended overview from the Global Property Guide covers key aspects of Mexico’s housing market and takes a closer look at its most recent developments and long-term trends.

Table of Contents

• Housing Market Snapshot
• Residential Hotspots
• Supply Highlights
• Rental Market
• Mortgage Market
• Socio-Economic Context

Housing Market Snapshot

House prices in Mexico have remained resilient, driven by sustained demand for housing, particularly in metropolitan areas, alongside a contracting supply of new dwellings. In the fourth quarter of 2024, the House Price Index for dwellings purchased with a mortgage, as calculated by the Federal Mortgage Society (SHF), demonstrated an 8.7% year-on-year growth compared to the same period in 2023.

On an annual basis, the nationwide index rose by 9.2%, with second-hand dwellings increasing by 8.9% year-on-year and new developments growing by 9.6%.

"Demographic trends and urbanization are significant factors influencing the housing market in Mexico. <…> Housing prices have also benefited from an increase in foreign buyers, including due to capital gains tax exemptions and a reduced property tax rate for U.S.-based buyers," states the latest IMF country report on Mexico.

Mexico's house price annual change:

Research conducted by Tinsa México provides a segmented price analysis of the country's key housing markets, including Mexico City (CDMX), Monterrey, Guadalajara, and the Valley of Mexico (including the State of Mexico and Hidalgo). The analysis covers property segments ranging from the Luxury, catering to affluent buyers with premium locations and high-end amenities, to the Popular (Social), focused on government-supported affordable housing. According to Tinsa, as of Q4 2024, the highest price growth among the segments in key markets was observed in the Popular housing segment, which increased by 12.06% year-on-year, reaching MXN 10,660 (USD 526) per square meter. The Luxury segment saw the second-highest growth, rising by 7.01% year-on-year to MXN 101,145 (USD 4,992) per square meter. The lowest growth, at 3.04% year-on-year, was recorded in the Residential Plus segment, priced at MXN 74,426 (USD 3,673).

Housing price dynamic in key submarkets by segment:

Looking ahead, industry experts expect price acceleration to continue, supported by strong demand in both domestic and foreign segments, coupled with limited supply and contracting production of new dwellings. However, as house prices continue to outpace the growth of real wages, coupled with a high-interest rate environment and a shortage of affordable housing, affordability issues for the lower-income population are likely to worsen.

Residential Hotspots:

Housing Profile in Key Submarkets

Mexico offers diverse real estate opportunities, catering to a variety of preferences and investment goals. The real estate market across key cities remains strong, driven by economic expansion and evolving demand dynamics. Mexico City continues to attract significant investment, supported by its expanding commercial sector and rising population, sustaining high demand for residential properties despite affordability challenges. Monterrey, as an industrial and business hub, experiences steady appreciation fueled by corporate expansions and cross-border trade. Guadalajara benefits from a thriving tech sector and cultural appeal, making it an attractive market for both domestic and international investors.

According to property website Inmuebles24, residential prices across all three key cities rose by more than 8% year-on-year as of December 2024. Monterrey saw the highest increase, with asking prices up 9.9%, while also recording the highest nominal price per square meter at MXN 73,975 (USD 3,651).

Housing asking price dynamic in key submarkets:

Beyond major urban centers, several markets are experiencing strong growth, driven by tourism and increasing demand for second homes and short-term rentals. The Riviera Maya continues to see robust interest in vacation properties, supported by foreign investment and infrastructure projects such as the Mayan Train. Mérida, known for its safety and high quality of life, attracts both domestic and international buyers, while Los Cabos benefits from rising demand for luxury real estate, further strengthened by ongoing infrastructure development.

Mexico City (CDMX)

Mexico City, the capital and largest city of Mexico, is home to over nine million residents, making it one of the most populous urban centers globally. The city's growth is fueled by a strong concentration of services, employment opportunities, and educational institutions, alongside expanding commercial development and significant infrastructure investments, including enhancements to public transportation and the construction of the New Mexico City International Airport (AICM).

The housing market remains dynamic, with residential prices continuing to rise due to constrained supply in central neighborhoods and growing interest from both domestic and international buyers. Rental prices have also increased, driven by demand from remote professionals and digital nomads. While luxury developments continue to expand, affordability remains a key challenge, prompting a shift toward emerging neighborhoods offering more accessible housing options.

As of December 2024, the average asking price for residential properties in Mexico City reached MXN 50,116 (USD 2,473) per square meter, reflecting an 8.1% year-on-year increase, according to Inmuebles24. Prices for new developments averaged MXN 60,839 (USD 3,003) per square meter, while second-hand properties were listed at MXN 44,396 (USD 2,191) per square meter.

The city's most expensive neighborhoods, where average asking prices exceed MXN 100,000 per square meter (USD 4,935), include 1ra Sección del Bosque de Chapultepec, Bosques de Chapultepec, and Rincón del Bosque.

Data Source: Inmuebles24.

Monterrey

Monterrey, the capital of Nuevo León and a key economic and industrial hub, has emerged as a prime destination for real estate investment, driven by its strategic location with direct access to major US markets. The presence of leading international corporations has accelerated the city's economic expansion, particularly in the industrial and technology sectors, reinforcing Monterrey's position as a center for industrial and commercial development and sustaining strong demand for high-end housing.

As of December 2024, the average asking price for residential properties in Monterrey reached MXN 73,975 (USD 3,651) per square meter, reflecting a 9.9% year-on-year increase, according to Inmuebles24. Prices for new developments averaged MXN 78,037 (USD 3,851) per square meter, while second-hand properties were listed at MXN 64,429 (USD 3,180) per square meter.

The city's most expensive neighborhoods, where average asking prices exceed MXN 115,000 per square meter (USD 5,676), include Valle de Campestre, Altus, and Parque Corporativo Santa Engracia.

Data Source: Inmuebles24.

Guadalajara

Guadalajara, a key economic and cultural hub in Mexico, is experiencing significant growth in its real estate sector, driven by ongoing commercial development, a high quality of life, and its rich cultural offerings. Strategic investments in infrastructure, such as the expansion of the transport system and new developments on the city's outskirts, have contributed to an increase in property values. Additionally, the influx of major technology companies, including IBM and HP, has further fueled demand for residential properties.

As of October 2024, the average asking price for residential properties in Guadalajara reached MXN 52,830 (USD 2,607) per square meter, marking an 8.3% year-on-year increase, according to Inmuebles24. New developments were priced at MXN 56,527 (USD 2,790) per square meter, while second-hand dwellings stood at MXN 47,957 (USD 2,367) per square meter.

The city's most expensive neighborhoods, where average asking prices exceed MXN 70,000 per square meter (USD 3,455), include Residencial Juan Manuel, Vallarta Poniente, Residencial Virreyes, and Fraccionamiento Puerta de Hierro.

Data Source: Inmuebles24.

Supply Highlights:

Housing Shortage Deepens Amid Declining Construction Activity

The latest Census carried out in Mexico in 2020 revealed a total housing stock of over 43.9 million dwellings nationwide, with 80.2% reported as occupied, 5.7% used temporarily, and 14.0% vacant. The highest concentrations of housing are found in urban areas, particularly in Mexico City (12.3%), the State of Mexico (6.9%), Veracruz de Ignacio de la Llave (6.9%), Jalisco (6.7%), and Puebla (4.9%).

Over the past decade, Mexico has been facing a persistent housing shortage driven by rapid urbanization, population growth, and economic disparities. The housing deficit is projected to reach 2.8 million homes by 2025, with the most significant impact felt by the lower-income segment of the population. "Access to adequate housing remains challenging in Mexico as many low- and middle-income households cannot afford purchasing a house because of high housing prices and limited access to credit," notes the OECD.

This situation has been compounded by a continued decline in new housing production, which has reached new lows in the past three years. "Growing construction costs and land-use constraints continue to limit the supply of new housing. These limitations hinder real estate developments and worsen affordability problems," states the IMF country report on Mexico.

According to the data from the Housing Registry (Registro Único de Vivienda - RUV), the number of new dwellings completed in 2024 fell to the lowest level in the last 11 years, totaling just 128,143 units, a 2.18% year-on-year decline. Experts attribute this slowdown to elevated interest rates and costs of credit over the recent years, coupled with escalating construction prices and ongoing reforms in the construction sector causing uncertainty. "We need greater coordination and a clear agenda from the government. At present, we feel sidelined, and we are concerned about the feasibility of meeting construction targets," said Alberto Moreno, national president of the National Chamber of the Housing Development and Promotion Industry (Canadevi), in an interview with El Financiero.

Data Source: RUV.

In response to the ongoing housing crisis, the Mexican government announced a comprehensive plan in October 2024 aimed at constructing one million low-cost homes, legalizing another million, and improving 450,000 existing homes over the next six years, with an investment of MXN 600 billion (approximately USD 30 billion). This initiative will prioritize vulnerable groups, including women heads of households, youth, Indigenous populations, and the elderly.

Rental Market:

Increased Demand for Rental Housing and Strong Growth in Rents

In the face of high and increasing property prices in the main cities and smaller communities alike, a growing share of Mexico's population has been opting for rental housing. According to the most recent National Housing Survey published by the INEGI, as of 2020, 16.4% of occupied dwellings in Mexico were rented, the proportion increasing from 15.2% previously reported in 2014. In parallel, the share of owner-occupied dwellings dropped from 61.4% in 2014 to 57.1% in 2020.

The survey also showed that more than half of those renting their primary residence (51.4%) did so due to lack of access to credit or sufficient funds to buy, with a further 9.7% remaining tenants due to potential mortgage payments exceeding their monthly rents.

A recent analysis of user activity at the real estate portal Propiedades.com, cited by El Economista, indicated that rental listings, while comprising only 30% of the inventory available at the platform, generate more than twice as much engagement as properties listed for sale. "Mexicans are prioritizing the flexibility offered by renting due to various factors, including the current economic context with inaccessible interest rates for home purchases. In addition, the growth of urban areas and the need for proximity to work centers and services also influence this preference," said Juan David Vargas, general director of Propiedades.com.

Data Source: Inmuebles24.

According to reporting from the property platform Inmuebles24, average asking rents in Mexico's key submarkets demonstrated strong growth in 2024; however, the rental inflation appears to be past peak, the pace of growth slowing down somewhat in the second half of the year.

In Mexico City (CDMX), the average monthly rent for a 2-bedroom apartment reached MXN 19,319 (USD 953) in December 2024, showing a 14.4% year-on-year growth. The average rent in the primary segment increased by 19.3% since December 2023 and reached MXN 22,561 (USD 1,113), while the annual growth in the secondary segment was slightly less pronounced at 12.6%, with the average rent reported at MNX 18,380 (USD 907). Within the capital city, the average rents varied greatly from MXN 33,583 (USD 1,657) in Del Bosque to MXN 8,929 (USD 441) in Fracc. Las Américas.

Average asking rents for a 2-bedroom apartment in key submarkets:

Gross rental yields for apartments in Mexico averaged 6.13%, according to research by the Global Property Guide conducted in November 2024, up from 5.83% previously reported in March 2024. Among the monitored regional submarkets, the highest average yield was observed in Monterrey and Puebla (6.43%, both), while Guadalajara (5.75%) and Cancún (5.68%) demonstrated lower potential performance. In the capital, the average yield stood at 6.24%.

Looking ahead, industry experts cited by Forbes expect the rental market in Mexico to remain highly attractive in 2025, both in the long-term and short-term rental segments. Among the new trends, institutional rental housing will continue to emerge as an alternative to traditional private rentals － typically charging higher rates but offering prime locations, amenities, and on-site services.

Mortgage Market:

Interest Rates Stable, New Lending Driven by Public Institutions

Reflecting the overall disinflation trajectory in the country, the Bank of Mexico (Banxico) has been bringing down its monetary policy rate - the overnight interbank target rate - since March 2024, gradually cutting it from the 11.25% peak to the current 9.50% standing announced in February 2025.

Mexico's mortgage loan interest rates:

Based on the regulator's outlook, further easing of the policy can be expected throughout the year, however, the overall stance is to remain restrictive. "[The Governing Board] anticipates that the inflationary environment will allow to continue the rate cutting cycle, albeit maintaining a restrictive stance. It will take into account the effects of the country's weak economic activity <…>. Actions will be implemented in such a way that the reference rate remains consistent at all times with the trajectory needed to enable an orderly and sustained convergence of headline inflation to the 3% target during the forecast period," said the central bank.

Data Source: Banxico.

Despite the established downward trajectory for the Banxico target rate, mortgage rates in Mexico remain stable. The average nominal interest rate for fixed-rate mortgages most recently reported by the central bank at 11.45% in December 2024, virtually unchanged in the last year and only marginally down from the level observed two years prior. This relative insensitivity of mortgage rates to changes in monetary policy can be attributed to a high ratio of non-market-based loans provided by public institutions in Mexico.

At the same time, commercial banking executives, cited by El Economista, expect lenders to remain cautious in the near term, also maintaining the interest rates at current levels at least in the first half of 2025, as the industry braces for the potential impact of the new US tariffs on the Mexican economy.

Nominal interest rates on fixed-rate mortgage loans to households:

In terms of new mortgage originations, the reporting from BBVA Research shows that the market stopped falling and began showing a positive dynamic in H1 2024; however, the moderate growth registered was driven by public institutions, such as the Institute of the National Housing Fund for Workers (Infonavit) and Housing Fund of the Institute for Social Security and Services for State Workers (Fovissste), while new lending in the private banking segment was still in decline.

In the first six months of the year, a total of 232.9 thousand new mortgage loans were reported (+11.4 year-on-year), of which 180.1 thousand were granted by public lenders (+18.3% year-on-year) and 57.4 thousand by private lenders (-6.8% year-on-year). The total value of new loans during this period amounted to MXN 261.1 billion (USD 15.2 billion), a 2.2% increase compared to the same period in 2023. Of those, mortgages granted by public lenders reached MXN 128.5 billion (USD 7.5 billion), showing a substantial 17.6% increase, while mortgages granted by the private sector amounted to MXN 132.7 billion (USD 7.7 billion), dropping by 9.2%.

The average size of a new mortgage loan during this period was reported at MXN 1,121 thousand (USD 65.5 thousand), an 8.3% decrease from the same period the year prior, which indicates buyers opting for lower-priced homes, according to BBVA Research.

According to the commercial banking experts cited by El Economista, the outlook for 2025 in terms of loan originations is similar to the dynamic observed in 2024. "We are going to see single-digit growth, we don't expect double-digit growth like in 2021 because the mortgage market that banks are targeting is in a period of adjustment… Interest rates are highly relevant; they are expected to fall, but in a more gradual way than they rose," said Enrique Margain Pitman, director of Personal Loans at HSBC Mexico.

The relative size of the mortgage market in Mexico remains limited, estimated at 10.8% of the GDP at current prices as of 2023. As of Q3 2024, the total value of outstanding mortgage loans stood at MXN 3.6 trillion (USD 191 billion), showing a moderate 5.2% growth since the beginning of the year and a 6.1% growth since the same period in 2023. Bank credit comprised 39.9% of the stock, up from 21.1% two decades ago in 2004.

Data Sources: Banxico, OECD.

Socio-Economic Context:

Further Slowdown in Growth, Uncertainty Tied to the US Policies

After expanding by 3.2% in 2023, supported by rapid growth in non-residential construction and manufacturing as firms expanded their capacity to supply the US market, the Mexican economy has slowed to an estimated 1.5% real GDP growth in 2024, according to the International Monetary Fund (IMF) data. This moderation in economic activity is tied to the restrictive monetary policy and binding capacity constraints, which are expected to continue in 2025, leading to further slowdown.

The Mexican economy is currently projected by the IMF to grow by 1.3% in 2025 before picking up in 2026 onward. "In 2025, the planned fiscal adjustment and slower growth in the US would create a further headwind to growth. Over the medium term, growth is projected to converge towards potential of around 2 percent," said the IMF in their 2024 Article IV Staff Report.

At the same time, based on the lower-than-expected performance in Q4 2024 and uncertainty related to possible US tariffs against Mexico, Banxico recently lowered its growth forecast for 2025 from 1.2% to just 0.6%. "There is a high level of uncertainty about the policies that the new Administration in the United States could implement. If there are changes in the trade relationship with the United States, they could have significant implications for the economic activity of both countries. If policies of this type materialize, there would be effects on our economic activity," said the central bank's governor, Victoria Rodríguez Ceja, quoted by El País.

Consumer Price Index (CPI) inflation in Mexico eased from 7.9% in 2022 to 5.5% in 2023 and 4.7% but remains above the central bank's 3% target. Most recently, the indicator was reported by the INEGI at 3.6% in January 2025. The IMF forecast currently expects the inflation in Mexico to average 3.8% in 2025 before stabilizing at 3% from 2026 onward.

Data Source: IMF.

In Mexico's labor market, the unemployment rate trend remained stable throughout 2024, most recently reported by the INEGI at 2.6% in December. However, there are growing concerns over formal employment and job creation in the country in the near future, as the main implication of slower than previously projected economic growth for the labor market is the corresponding slowdown in job openings across the country.

The latest quarterly report from Banxico expects between 220 and 420 thousand formal jobs to be added in 2025, which is notably less than the 340-540 thousand range estimated in the previous report. Other experts voice even lower estimates for job creation in the year ahead.

"For formal employment, we are estimating a growth of 0.8% for the entire year, and this is equivalent to the creation of 170,000 new jobs, which is well below the 433,000 created in 2024. This would be accompanied by a broader labor market, which would be reflected in a higher unemployment rate; in fact, we are estimating it at 3.4% compared to the 2.7% in 2024," said Guillermina Rodríguez, director of Economic Studies at Banamex, in a recent article in El Economista.

Data Source: INEGI.

Overall, a sustained track record of strong policies, economic fundamentals, and institutional policy frameworks have helped Mexico maintain a sound macroeconomic position, notes the IMF staff report. The country's public debt remains relatively low, proactive monetary policy is bringing inflation down, and benefits from a realignment of global supply chains may be materializing.

At the same time, the outlook for economic activity in the country remains uncertain due to a number of external and internal risks. In addition to the announced US actions regarding immigration, trade, and other areas (the scope of which is still unknown), the latest assessment from Banxico indicates other factors working against Mexico's economic growth, such as the further slowdown in the US economy, the materialization of episodes of volatility in financial markets, and a reduction in public spending in the country.

Earlier in the year, Claudia Sheinbaum of the incumbent Morena party won the election in Mexico with the largest margin of victory since 1982, becoming the country's first female president and signaling broad policy continuity in the upcoming period.

Sources:

1. National Institute of Statistics and Geography (INEGI)
   1. Census of Population and Housing 2020: https://en.www.inegi.org.mx/
   2. National Housing Survey (ENVI) 2020: https://en.www.inegi.org.mx/
   3. Economy and Productive Sectors (ES): https://www.inegi.org.mx/
   4. Consumer Price Index (CPI): https://en.www.inegi.org.mx/
   5. Employment and Occupation: (ES): https://www.inegi.org.mx/
2. Bank of Mexico (Banxico)
   1. Quarterly Report October-December 2024, Executive Summary: https://www.banxico.org.mx/
   2. Monetary Aggregates and Financial Activity in December 2024 (ES): https://www.banxico.org.mx/
   3. Banking and Alternative Financing Sources to Domestic Private Sector: https://www.banxico.org.mx/
   4. Monetary Policy Statements: https://www.banxico.org.mx/
   5. Meeting of Banco De México's Governing Board…: https://www.banxico.org.mx/
3. Federal Mortgage Society (SHF)
   1. SHF Mexican Housing Price Index, Q4 2024 (ES): https://www.gob.mx/
4. Registro Único de Vivienda (RUV)
   1. Strategic Information, Basic Figures (ES): https://portal.ruv.org.mx/
5. International Monetary Fund (IMF)
   1. Country Overview: Mexico: https://www.imf.org/
   2. 2024 Article IV Staff Report: https://www.imf.org/
6. Organization for Economic Co-operation and Development (OECD)
   1. OECD Data Explorer: https://data.oecd.org/
   2. Improving Housing and Urban Development Policies in Mexico: https://www.oecd.org/
7. BBVA Research
   1. Mexico Real Estate Outlook. Second Semester 2024: https://www.bbvaresearch.com/
8. Inmuebles24
   1. CDMX - December 2024 Sales (ES): https://www.inmuebles24.com/
   2. Monterrey - December 2024 Sales (ES): https://www.inmuebles24.com/
   3. Guadalajara - October 2024 Sales (ES): https://www.inmuebles24.com/
   4. CDMX - December 2024 Rents (ES): https://www.inmuebles24.com/
   5. Monterrey - December 2024 Rents (ES): https://www.inmuebles24.com/
   6. Guadalajara - October 2024 Rents (ES): https://www.inmuebles24.com/
9. Tinsa México
   1. Real Estate Outlook 2025 (ES): https://www.tinsamexico.mx/
10. Fitch Ratings
    1. Fitch Affirms Mexico at 'BBB-'; Outlook Stable: https://www.fitchratings.com/
11. El Economista
    1. Mortgage Credit Outlook in 2025: Caution Due to Trump Effect and Moderate Growth (ES): https://www.eleconomista.com.mx/
    2. The Need for Rental Housing Increases Due to Inaccessibility of Sales Prices (ES): https://www.eleconomista.com.mx/
    3. Low Economic Growth in 2025 Will Put Formal Employment in Jeopardy (ES): https://www.eleconomista.com.mx/
12. El País
    1. Bank of Mexico Cuts its Growth Forecast for the Mexican Economy in 2025… (ES): https://elpais.com/
    2. Sheinbaum Announces The Construction Of One Million Social Housing Units (ES): https://elpais.com/
13. Forbes
    1. The Housing Market in 2025: Sales, Rentals, Niches of Opportunity (ES): https://forbes.com.mx/
14. El Financiero
    1. Residential Production Hits Its Lowest Level in Decade (ES): https://www.elfinanciero.com.mx/