These are not easy times to read in real estate matters. There are several “hairs in the soup” that make the analysis not simple: rise in construction materials, socio-political instability, Covid effects and a long etcetera, complicate any evaluation. However, one thing I am sure of: the real estate market is far from a new crisis subprime.
In that period, a sharp contraction in sales caused a precipitous fall in prices, where there were so-called “night sales” with discounts never seen before. Several real estate companies looked very complicated to cash, with a high level of unsold stock and credit terms running out and draconian interest rates on their backs.
Today, the picture is different. Construction costs make it impossible to lower prices much further and the composition of the offer also allows developers to move with greater leeway. The truth is that they learned their lesson and at the first signs of demand adjustment, many began to decrease the income of projects. So much so, that in just over a year there will be practically no new supply, if the market is not reactivated.
With this, the stock can absorb a demand that is not zero, but that has drastically changed its profile. With the current mortgage conditions, most of the natural persons who buy are the ones who will actually live in the property; Ants looking for opportunities to expand their portfolio are becoming fewer. In the case of investors with larger backs, many have chosen to diversify their portfolios, looking more outward than inside Chile.
In this scenario, the multifamily seem to have the court clear to continue adding prominence. For them, the business remains attractive because rental properties have only risen, given the greater restrictions on mortgage credit for individuals.
Now we will have to wait to see what happens with the constitutional process and the election of constituents. Until that happens, it’s hard to see how sales and the profile of property buyers will behave. The only thing that is clear is that it is not a new subprime.
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The content expressed in this opinion column is the sole responsibility of its author, and does not necessarily reflect the editorial line or position of El Mostrador.
