House prices rose by a meager 0.8% y-o-y in Q3 2022

Mexico’s housing market remains frail, with the nationwide house price index (inflation-adjusted) rising by a miniscule 0.8% in Q3 2022 from a year earlier, down from a y-o-y growth of 2.73% in Q2 2021. On a quarterly basis, house prices were up 1.04% in Q3 2022.

For almost 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, all inflation-adjusted. The housing market improved gradually in recent years, with real house prices rising by an annual average of 2.75% from 2016 to 2021.

Investors are fleeing; Inventory rising

Many Mexico City residents are selling their homes and moving to outlying areas with more space or reinvesting in other countries, said Hector Romero of Peters & Romero Bienes Raices agency and Andrés Vizcaíno of KW Pedregal Keller Williams, amidst the ongoing pandemic and heightened economic and political uncertainty. This results to increased inventory, which is suppressing house prices. 

Rents, rental yields: good rental yields in Mexico City at 4.11% to 9.26%

Mexico: city centre apartment buying price, monthly rent (2-BR apartments)
  Buying price Rate per month Yield
Mexico City  (Benito Juárez)   $196,753   $981 5.98%
Acapulco   $90,866   $221 2.92%
Guadalajara   $165,282   $1,085 7.88%

Recent news. Mexico’s economy grew by 4.3% in Q3 2022 from a year earlier, an acceleration from year-on-year expansions of 2.4% in Q2 2022, 1.8% in Q1 2022 and 1.1% in Q4 2021, according to the national statistics agency INEGI. The growth was mainly driven by the primary sector and despite an ongoing aggressive monetary tightening cycle.

The economy is expected to expand by a modest 2.1% this year, after registering a growth of 4.8% in 2021 and a huge contraction of 8.2% in 2020, according to the International Monetary Fund (IMF).

In December 2022, the central bank Banco de Mexico (Banxico) raised its key rate by 50 basis points to 10.5%, its 13th consecutive rate hike and adding to the cumulative 650 basis points rate increase since the start of the bank’s tightening cycle in June 2021 to address persistent inflationary pressures. The recent decision lifted borrowing costs to their highest level on record.