translated from Spanish: Interest grows to move away from the city centre and apartment lease prices remain low

The largest decrease in department lease prices since 2007 and an incipient revival of purchasing intentions in the real estate market are two of the main conclusions revealed by’s Quarterly Housing Report for the third quarter of 2020 for the Metropolitan Region.
The information raised accounts for a growing interest in living in the farthest communes of the center of Gran Santiago: Pudahuel, Padre Hurtado, San Bernardo, Cerrillos and Colina are the communes that have presented the greatest hikes in annual terms of quotes. “More affordable prices and more spacious places are variables of great weight given the current context, with a more depressed economy and a change in the lifestyle where you spend more time in homes,” explained Daniel McCleary, director of the platform.
On the contrary, central communes such as Quinta Normal, Estación Central, San Miguel and Santiago are slower to recover the levels of quotes they showed a year ago: “This could be explained as they are communes that underpin a significant part of the demand of the so-called investor ‘ant’, which in the face of complicated economic scenarios such as those we are going through, could show less interest in this kind of investment” , commented the executive, who further stated that compared to the immediately previous quarter there is a recovery in demand, but at levels below what was recorded 12 months ago.
Lease prices: Central Station and Santiago have the highest casualties
During the third quarter of the year there was the largest annual drop (i.e. versus third quarter of 2019) in lease prices recorded at site, with a drop of -1.7% for homes, and -7.7% for high-altitude properties, thus surpassing the previous period and thus recording a historic decline since 2007. However, by tracking monthly, September in both demand and prices noted an increase over August, which would prevent a recovery in this fall from close to the end of the year.
If analyzed by sectors in the region, it was the central area of Santiago that showed the biggest falls in apartment lease prices, with an average low in its values of -11.3%. In turn, the eastern sector was the least decaying, with -5.5%. At the commune level, the largest price decline, compared to the previous year, was recorded in Central Station with -11.6%, Santiago with -11.3%, San Joaquin with -10.9%, and Quinta Normal with -10.9%. In addition, the 23 communes analyzed in the lease price item showed falls, with the lowest decreases in the communes of San Bernardo with -2.6% and Vitacura with -2.7%.
In relation to Annual Gross Profitability, it also reached its all-time low since 2007, stood at 4.7% for apartments and 5.5% for homes. This translates into 21 years to recover the lease investment for the apartments and 18 years for the houses. “Quilicura appears positioned as the commune with the best return in the city, reaching 9.2%, which means less than 11 years to recover the investment through the income obtained by lease, contrasting with Vitacura that it would take 27.5 years to recover the investment in an apartment,” McCleary explained.
Finally, when analyzing the rental prices of departments, within the communes studied, Central Station proved to be the most accessible, while Vitacura the highest priced. For example, a 3-bedroom, 2-bathroom apartment in Central Station costs on average $410,780, while one of only 1 bedroom and 1 bathroom in Vitacura reaches $489,328, or nearly $80 thousand more per month.
Economic revival: 10% and low credit rates
The area of homes used, both in the lease and in the sale, is showing a revival after a flat second trimester. On the one hand, the lease exhibits a recovery thanks to an economy that gradually becomes more dynamic, while, in the buying market, the discounts, coupled with a drop in rates and moderation in the pace of growth in house prices, as well as additional factors such as the withdrawal of 10%, generated an increase in visits. All of this translates into 79.5% more search of users compared to the second quarter in the case of demand for leases and 20.6% in the case of sales.
As for the search for departments, the most demanded spaces were those of 40 square meters or lower, which presented an increase from 29.9% to 34.2% of total visits in the Metropolitan Region. The same phenomenon can be seen in one-bedroom departments, whose demand increased significantly relative to those with the most pieces, from 32.9% to 38.5% of the total.
Finally, in home purchase quotes, this third quarter has seen a significant recovery with a 51.6% increase in this type of operation, compared to the previous quarter of the year. However, despite this quarterly recovery, if it is seen in annual terms, the contribution levels seen 12 months ago are not yet recovered, since compared to the same period of the previous year, there is a drop of -11.3%.
Finally, with regard to the publication of department lease notices, these follow the trend of the previous quarter, increasing their availability, representing 49.6% of the total department notices for The Greater Santiago, 10 percentage points more than the same period of the previous year. He leads the commune of Central Station which in one year increased the number of notices of apartments by lease by 180.9% that is, almost tripled.
This is because communes such as Santiago Centro, Estación Central and Quinta Normal, have been part of the towns most affected during the last year by the fall in economic activity, which would have their explanation in two main factors.
“First, prior to the pandemic it had already been a very beaten area because it was the epicenter of manifestations, which increased vacancy more than in other areas. Second, in general the profile of people looking for rent in these areas, is of young people who have been in the labour market for a short time and who are therefore in a state of greatest vulnerability with little availability of savings when the economy contracts, having in many cases to leave their departments to return to their relatives and/or close, which leads to increases in vacation that end up pushing prices down,” McCleary argued.

Original source in Spanish

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