For several decades now, economics has been related much more to a social science, such as psychology or sociology, than to mathematics. In this sense, there was a “divorce” of the exact sciences and the assumption of rationality of economic agents, the basis of the postulates of the economy that governed the theory from the end of the 18th century to the first half of the 20th century.
What makes it so exciting economics study It is the fact that it is related to human behavior, and this is not always linked to the specific data of the macro or of each particular sector.
In this change of roles, previously unthinkable situations occur, such as the Nobel Prize in Economics awarded in 2002 to Daniel Kahneman (psychologist) for his theory on economic behavior in contexts of uncertainty. Or even the one awarded in 2006 to the prestigious economist Edmund Phelps for his studies related to the dynamics of expectations as an explanation of the inflationary phenomenon.
The sum of the millions of micro decisions (taking vacations, changing an appliance, buying new clothes, paying for a course, promoting a venture or buying new equipment in my company), are those that move the gear of economic activity, and all of them And each of these resolutions are based on a single determining factor: expectations.
What is going on with the macro?
It denotes a “change of cycle” in the Argentine economy still conditioned by several factors. In this sense, these 6 months of electoral political definitions are fundamental, although there are contextual conditions, such as the profound changes in international geopolitics that have put the most important countries in Latin America once again in the spotlight of powers such as China, the USA and the European Union, and the change in progress in the export matrix of our country, which are explanatory of the change.
In the middle of last year, the break in the trend in terms of the growth of positive expectations related to improvements in the economic situation for the coming years was striking. This trend, accompanied by a decreasing negative expectation, accelerated from the last quarter of 2022.
According to data from the analogies consultancy (see graph), towards May of this year, and more markedly in June, some of the main surveys related to expectations even marked a “crossing of curves” where positive prospects outweighed negative ones. Something that has not happened since December 2019. This improvement in expectations, driven by the resolution of the unknown regarding the official presidential formula, generated a significant rise in listed financial assets (basically company shares, public and private bonds), but what about the prices of other sectors?
In regards to estate, relevant asset for the average investor -given its use as a store of value and search for profitability-, During the last quarter of 2022, prices stabilized, cutting the fall that began four years earlier (2018). This trend slowly and gradually began to reverse in the first quarter of this year and continues on that path.
As a last resort the reason for the change in trend is the same as that seen in the case of financial assetsthe prices of both new and used properties, they had touched an exaggeratedly low floorsince it is difficult to think that in a sector where the dynamics of prices has been upward sustained in the last 20 years (2), the values have gone back to those of 2012/2013.
With the presidential election involved, logically it is not possible to be absolutely certain about the course of this recovery, however the macro data show projected indicators of consolidation, mainly the trade balance from 2024, which added to other factors Commented suggest a strong recovery in asset prices, including real estate.
Specialist in economics and corporate finance. Founding partner of the MAHE Desarrollos Inmobiliarios group.
(1) Since the first years after 2010, but very markedly since the end of this decade, we have been following and highlighting in some of our reports and articles the important development and growth of exports in energy sectors (substantial and impressive development of the Vaca Muerta pole in Neuquén as of 2014), Tourism, Knowledge Economy and to a lesser extent Mining.
(2) In 2002, the average price of an apartment in the City of Buenos Aires was US$920/m2. That same apartment on average in 2018 cost US$2,700/m2.
Source: Ambito
