Housing: prices could rise if real estate companies do not establish a land replacement policy

After the real estate industry was negatively affected by the restrictive measures, the sector has managed to recover rapidly from mid-2020 to the end of first term of 2021, being one of the most dynamic items in the economic reactivation stage.

Edmundo Lizarzaburu, professor of Administration and Finance at ESAN University, indicated that in the first quarter of 2021, sales of new homes in Lima and Callao increased by 30% compared to the same period in 2020, with the district of San Miguel the one that presented the greatest increase and urban development in that period.

“The search for homes outside the city has made beach and country houses recover their sales dynamism. Another segment that is growing very strongly and is increasing its sales are batches of Lima Sur. On the other hand, the occupancy rate of Prime Offices continues to be low and it is one of the hardest hit sectors, as well as the departments in exclusive areas of Lima”, pointed out Lizarzaburu.

The expert explained that construction companies have successfully tried to offset the higher cost of the exchange rate, which affects construction materials and coatings, building units with smaller areas that go to the aspirational sector and are sold faster. A) Yes, prices in the affected areas have fallen 10%, while in the areas of beach and country houses as well as in the outskirts of Lima, the amounts remain the same.

“If the real estate They do not establish a land replacement policy for this year 2022, the prices of these areas could begin to rise in the medium term,” he warned.

Additionally, he said that in 2021 the decrease in the cost of indebtedness and the historical security associated with the real estate market played in favor of this sector.

“The interest rate on mortgage loans went from 7.86% in January 2020 to 5.90% in June 2021. Fortunately, in 2020, the national subsidies offered such as the Universal Bonus, the Independent Bonus and the Rural they covered approximately 3.8% of the spending of Peruvian households. In addition, some social programs such as Beca 18, Pension 65 and Together, contributed 2% of expenses to support households with lower incomes”, he pointed out.

Regarding the projections of the real estate sector for this year, the ESAN University professor stated that the 120 m2 lots located on the outskirts of Lima are the ones that will have the most dynamism and will not be affected by the exchange rate, since that are sold in dollars and real estate agents have wisely set preferential exchange rates for their clients.