Gerardo Freiberg: “We are on track to continue increasing prices”

Freiberg details the factors that explain the local real estate market, which is not up to the needs of families and, due to its high concentration, increases costs in a period where rates were tightened due to the monetary policies of the Central Bank of Booking.

–How is the real estate market? Will it be affected by the fall in construction?

-In fact there is an impact on the sector, but we have to understand that our real estate market requires achieving greater maturity. Imagine if only two types of shoes were offered and in two sizes for the entire population. That would imply that although everyone needs it and has to use it, they will not be satisfied with what they receive. That’s what happens in the real estate sector.

–What altered the market?

-As a result of the tenancy law, which was a regional movement, a significant distortion is suffered. The tenant was excessively protected to the detriment of the owner and progressively generated the housing deficit that we experience today. The problem with rental housing is that there is not enough supply to serve the market, and it has an economic impact by reducing the labor mobility of young families and generating slums, which distorts everything. The increase in price is mainly associated with the lack of planning in promoting housing supply.

-Are state programs not complying?

Unfortunately not. Some exercises were done. We passed the rental law for housing, but the circle was not closed because that law should have included an exemption from the general sales tax for housing so as not to generate unfair competition between those who naturally rent and those with corporate rentals. It is very difficult for small builders to look for land to offer housing because they are at the mercy of large real estate companies that buy land for their bank and plan future developments for several years. This generally distorts the entire market beyond not meeting the needs of families.

-Does it explain the high prices?

-The fact that there is demand in the future generates upward pressure on the market. In Lima, costs are high because there is high density. Another type of development is required that does not necessarily involve social housing ownership. Everyone has the right to housing, but this property has to be given when it is required. The offer must be combined.

-Why does the increase in the value of m2 occur?

-Areas that were not very attractive before began to be so because these lands had more affordable values. It is a vicious circle that was fueled by the rise in rates.

-Are we heading towards a more expensive market?

-To the extent that appropriate actions are not taken, yes, we are on the path to continue with the increase in prices, which will not necessarily go hand in hand with the increase in units sold.

-Where to aim?

-There must be better segmentation of housing promotion. Not all of us need the same. Apart from a promotion of corporate investment in social rental housing: today there is the Mivivienda and Techo Propio bonus, but at some point there was talk of a bonus to help pay rent. It makes no sense to take out such a bond if there is no policy to promote private investment to benefit those with lower incomes.