RE/MAX Argentinean owners talks property market at recent South African event

Sebastian and Doti Sosa, Regional Owners of RE/MAX Argentina, recently visited South Africa and attended the RE/MAX of Southern Africa Stars Convention 2013 held at Sun City in February.

Speaking to the South African audience about their real estate journey with RE/MAX, which began in March 2005, Sebastian noted that more than a quarter of all real estate transactions in Argentina take place in Buenos Aires. “There are about 320 000 property transactions that take place in Argentina per year, 86 000 of which come about in Buenos Aires.”

Added to this, he says that only 6%-8% of the population in Argentina can afford to buy a home, the average value of which typically ranges between US$70 000 and  US$100 000. The property market in Argentina operates in a very different landscape to South Africa, as is evident in the fact that 95% of the home sales are cash based as there are very limited mortgage finance options available.

“Argentina is a large country,” says Sosa, “there are 40 million people, but it is only a few of these people who have the means to afford to buy a home. Wealthier Argentines do not use the bank for their savings or retirement plans but rather invest in property.”

Sosa says that in Argentina, the small part of the population that can afford to buy property, tends to invest in a portfolio of buy-to-let properties, as these perform exceptionally due to the fact that the majority of the population have to rent as they cannot afford to buy property.

“There is a huge demand for rental properties,” he says, “and as with any other country or city in the world, the price varies depending on where the property is situated.” He says that in a very upmarket part of Buenos Aires, the capital of Argentina, a two-bedroom, two-bathroom 100m2 unit will rent from around US$2000 upwards per month, whereas an the same apartment in an average area would rent for around US$1000 per month.

Sosa says that Argentines don’t really trust the banking system, so don’t use the banks to save or invest their money. He says that this perpetuates the problem, as the banks need money to loan money. “If the people don’t put their money in the banks for saving, then the bank does not have any money to lend. Therefore, there needs to be stability, credibility and trust before mortgage finance will become a reality in Argentina, and that is going to take quite a bit of time.”

Due to the costly nature of property, Sosa says that it’s in the lower price range, between US$80 000 and US$120 000, where the majority of property movement is happening around country. Location, he says, is also a very important factor, as it is worldwide.

According to Sosa, inflation is the most important factor influencing the Argentine property market, as it is currently between 30% and 35%. “The lack of financing and high interest rates of around 28%, as well as an informal and unpredictable market, means there is not much stability.”

Adrian Goslett, CEO of RE/MAX of Southern Africa, says that in comparison, property is generally more affordable and within reach for a great many more South Africans. “Locally we currently have the lowest interest rates we have had in many years that is expected to remain in single digits for the foreseeable future, targeted inflation that is well below 10% and a much more structured real estate market and stable, reliable financial institutions that encourage saving and investment.” Goslett says that more and more South Africans are taking the step towards homeownership, with nearly a quarter of all buyers over the past two years being first time property purchasers.

Sosa says that while it is more of a buyer’s market in Argentina right now, the property prices are very high and are continuing to climb - a situation which he says will need to be re-evaluated in the near future. “The average salary in Argentina is about US$1 500 per month. The average square meter price, if you want to buy something in the worst part of town, is equivalent to one month’s salary. In a very nice part of town it is about US$6 000 per square meter which is very expensive for most people. You will never be able to get a reasonable property in a nice part of Buenos Aires for less than US$80 000, so it is very difficult for an average household to afford an apartment, especially when there is no finance available.”

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 17 Nov 2017
      FWJK has announced the launch of its latest residential brand, the Lil’ Apple, which will be launched simultaneously in two developments in Cape Town and Umhlanga totaling 600 apartments. The Lil’ Apple is set to be a brand of FWJK’s New York style apartments which will be rolled out nationally.
    • 17 Nov 2017
      It’s been a tumultuous year on many fronts, with socio-political uncertainty setting the tone for much of South Africa’s economic activity yet despite this and seemingly counter-intuitively, the residential property market has held up well.
    • 17 Nov 2017
      The EAAB (the Estate Agency Affairs Board) recently claimed that around 50,000 illegal estate agents could currently be operating illegally.
    • 16 Nov 2017
      Penthouses are synonymous with New York – characterised by high-rise living that is decidedly luxurious and spacious. While exclusivity comes at a price, you can still create a “penthouse” look and feel in your existing apartment or even the upstairs bedroom of a double storey house with some clever design changes and styling touches.
    • 16 Nov 2017
      The area has long been popular with kite surfers and, with escalating property prices in Cape Town itself, is increasingly in demand with home owners who work in town, but are looking to invest in more affordable properties.
    • 16 Nov 2017
      Cape Town’s popularity as a world-class tourist destination has resulted in a spike in the number of homes available for holiday lets and fuelled investor demand for sectional title units with short term rental potential.
    • 15 Nov 2017
      Sappi, one of South Africa’s oldest global companies and a leading global supplier of sustainable woodfibre products, has moved its global and regional headquarters to a new site on the corner of Oxford and 14th Avenue in Rosebank.
    • 15 Nov 2017
      There’s an old saying in real estate that you should seek to make a profit when you buy, not only when you sell – and a large part of succeeding at that endeavour is buying a home in an area with desirable features that will enhance the resale value of your property.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us