House prices rose by a meager 0.2% y-o-y in Q2 2022

Mexico’s housing market remains cold, with the nationwide house price index (inflation-adjusted) rising by a miniscule 0.2% in Q2 2022 from a year earlier, down from a y-o-y growth of 1.67% in Q2 2021. On a quarterly basis, house prices were up 0.65% in Q2 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: 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. Mexico’s economy grew by 2.1% in Q2 2022 from a year earlier, following y-o-y expansions of 1.8% in Q1 2022, 1.1% in Q4 2021, 4.5% in Q3 and 19.9% in Q2, despite mounting concerns about the economic fallout of Russia’s invasion of Ukraine and Covid-19 lockdowns in China to Mexico’s domestic economy. The economy is expected to expand by a modest 2.4% 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 August 2022, the central bank Banco de Mexico (Banxico) raised its key rate by 75 basis points to 8.5%, its tenth consecutive rate hike since June 2021 to address persistent inflationary pressures.