What is more convenient, buy or rent housing?

As mentioned in the article of the newspaper the country (link: click here) the present 2019 is a year "particular" as it relates to the real estate market, since there are different variables intervening in the same. Among these are: the reduction of permits for new works, the strengthening of the dollar in relation to the peso, the increase in construction costs and the particular Argentine situation, which is compounded by greater uncertainty as this is an election year – both in our country and on the neighboring shore.

So, what can we expect? What is the opinion of the specialists for what we will see this year? The newspaper El Pais consulted with different real estate operators to cover this issue and all agreed on the following: "The preference of those who seek housing – the trend is accentuated when it comes to young people – is rent, as prices continue registering low casualties and buying a house is still too expensive. " Specifically, in the case of the sale of properties, we have that the price remained stable suffering only some losses in the last quarter of 2018. According to the figures of Sures Real Estate, the monthly average was about 0.2% with respect to the first quarter of said 2018.

"The last months of the year indicate a trend of the market with a slower pace when it comes to buying and closing operations. It must be taken into account that the rise of the dollar affected the purchasing power, "he told the newspaper El País Carlos Aliano, of the aforementioned institution. Since real estate prices are handled in dollars and the vast majority of wages are paid in pesos, it is that the rise of the American currency "increases the value of the property in pesos."

For rents, it was found that these had an increase of approximately 5% during the last year, but in real terms (when considering inflation) they experienced a decrease of between 3% and 4%.

Ricardo Frechou (CEO of InfoCasas) points out that elements such as access to credit (in Uruguay it is usual to pay almost twice as much as borrowed money), property prices together with wages have led to rents being a priority the time to choose how to live. According to his own words: "In InfoCasas 80% of the searches are rents, and this is not because they are cheaper or are more accessible, it is because they are difficult to buy." The specialist also said that the trend of renting "is going to be maintained in 2019 and in 2020 above the sale."

So there is no absolute answer to the question of what is more convenient: buy or rent. Each situation is particular and each of these options presents benefits and difficulties, which must be evaluated by each subject or family group.

Bruno Gardi (ACSA real estate rental manager) stated that "although the decision depends on the realities of each individual, the dream of owning the house has an impact on the decisions of the people and in general is which is aimed ".

The dream of own home has always been one of the most outstanding in our country and its long term purchase (about 10 years or more) remains attractive. Not only for families, but also for investors. The latter, on the other hand, acquire several properties to later "place them in the market of rents or sell them in the long term" and thus obtain to obtain a rent by its "capitalization". In the words of Frechou -present 3 paragraphs ago-, "the most demanded property values ​​today are around US $ 250,000."

As we saw, the rent can be chosen in the short term, either for the cost of the same versus other options, as well as how difficult it is sometimes to save or get loans that target the home itself. On the other hand, it is also "the only solution" in many other cases.

AND THE OWNERS, ARE IN FALL …

Julio Villamide, told El País that the percentage of owners in Uruguay declined year after year. The data handled are as follows: at the end of the 1990s, there were 60% owners (approximately 1,300,000 families) and today, 20 years later, the number dropped to 50%. "That implied a loss of 10% of owners which means that 130,000 families who owned 20 years ago today can no longer – or do not want to – be," he concluded.

More information also mentions that: of every four searches of properties, approximately three they refer to rents and only one to purchase; Sures and infoCasas estimate that "a family must have $ 120,000 of income to access a mortgage loan and based on that, calculate that in the whole country there are only about 35,000 families in that condition (state subsidies are not included)" .

Aliano adds to the question of housing an interesting observation: being able to acquire it plays in favor of the individual since it generates patrimonial benefits (and even if it is sold in the future) will always produce profitability. "In the case of renting you will never have a return."
Sebastián Fleitas (economist and researcher) says that the "lack of depth of the capital market" leads investors to buy housing and then rent. "It is profitable to 'invest in bricks' fundamentally for two reasons: the rent that is obtained pays the house in relatively few years and the price of the properties tends to rise in the time by which a capital gain is realized with relative low risk "(words expressed in your Twitter account).

CRISIS, "DOMINO EFFECT" AND SETTLEMENTS

Finally it is important to highlight the alert given by Julio Villamide: the so-called "domino effect". It is conceptualized as a "socio-economic phenomenon" that involves the displacement of the populations to the outskirts of the city, fundamentally in search of more accessible housing prices. At the end of the 1980s, our country experienced a difficult time, caused by the high costs of having a home of its own at the time. It is here that settlements began to grow dramatically. And today, the decline in the price of rents "responds to a lower demand from tenants, and in turn, that lower demand corresponds to that again (had fallen between 2004 and 2011) are growing settlements.

Material generated from the digital newspaper El País information: click here

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