Trend: house prices rose by 4.75% y-o-y in Q3 2018

Mexico’s housing market continues to strengthen with the nationwide house price index rising by 4.75% during the year to Q3 2018, a sharp turnaround from a y-o-y decline of 1.42% in Q3 2017. Though on a quarterly basis, house prices dropped 0.99% 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.  

Analysis: 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. In 2016 and 2017, the number of closed sales to foreign buyers increased to 1,105 per year, up from an annual average of 663 from 2008 to 2015, according to the Ministry of Foreign Affairs (SRE).

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: 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 Rate per month Yield
Mexico City  $ 222,180 n.a. n.a.

Recent news. The central bank Banco de Mexico (Banxico) held its key rate unchanged at 7.75% in October 2018 – the highest level in nine years – after five rate hikes in the past seventeen months, amidst recovering peso and increasing optimism over NAFTA trade negotiations with the US (which will be replaced with a new trade deal called the US-Mexico-Canada Agreement or USMCA). 

The economy is expected to expand by a modest 2.2% this year, from expansions of 2% in 2017, 2.3% in 2016, 2.7% in 2015 and 2.3% in 2014, according to the IMF.