House prices rose by 2.93% y-o-y in Q2 2020

Mexico’s housing market remains healthy, despite ailing economy. The nationwide house price index rose by 2.93% during the year to Q2 2020, following y-o-y rises of 3.54% in Q1 2020, 4.58% in Q4 2019, 4.96% in Q3 2019 and 4.78% in Q2 2019. On a quarterly basis, house prices rose by 1.7% during the latest quarter.

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%, in 2016 + 4.07%, and in 2017 +0.73%, all inflation-adjusted. House prices increased robustly by 4.32% in 2018 and by 4.58% in 2019.

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.

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 this year, with IMF recently revising its 2020 economic forecast for Mexico to a whopping 10.5% contraction, worse than its earlier estimate of a 6.6% decline.

In August 2020, the central bank Banco de Mexico (Banxico) cut its key rate by another 50 basis points to 4.5%,  its tenth consecutive rate cut in twelve months, in an effort to contain the impact of the COVID-19 pandemic and plunging oil prices.