House prices rose by 1.08% y-o-y in Q3 2020

Mexico’s housing market is slowing again, amidst an ailing economy. The nationwide house price index rose by a meagre 1.08% during the year to Q3 2020, a sharp slowdown from the previous year’s 4.96% growth. On a quarterly basis, house prices fell slightly by 0.6% during the latest quarter.

House prices increased robustly by 4.32% in 2018 and by 4.58% in 2019.  For a decade before that Mexico's housing market had hardly moved. It was a pattern of almost total stability, perhaps reflecting Mexico's highly competitive construction industry.  In 2009, house prices rose 0.77% (inflation-adjusted), in 2010 they fell 0.59%, in 2011 + 2.37%, in 2012 -1.15%, in 2013 + 0.39%, in 2014 + 0.84%, in 2015 + 4.36%, in 2016 + 4.07%, and in 2017 +0.73%, all inflation-adjusted.  


Luxury market buoyed by both foreign and domestic demand. 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. 

Mexico’s rising middle class continues to boost the housing market. The country’s middle class was estimated to account for almost half of the total households, at 14.6 million. They are expected to continue growing, with about 3.8 million more households projected to move into the middle class by 2030.

However the ongoing pandemic is causing a temporary fall in housing demand, resulting in a slowdown in house price increases.

Rents, rental yields: moderate yields at 4.9% to 5.4%

Mexico City apartment costs are reasonable at around $3,000 per sq. m. 

Mexico: typical city centre apartment buying price, monthly rent (120 sq. m)
  Buying price Rate per month Yield
Mexico City   $350,000   $1,500 5.2%

Recent news. The Mexican economy shrank by 0.3% in 2019, the weakest performance in a decade. The country’s economic woes are expected to be extended, with the IMF projecting a whopping 9% contraction this year.

In November 2020, the central bank Banco de Mexico (Banxico) held its key rate unchanged at 4.25%, following eleven consecutive rate cuts in the past fifteen months, in an effort to contain the impact of the COVID-19 pandemic and plunging oil prices.