He National Institute of Statistics (INE) disclosed the current values of the rentals throughout the territory, corresponding to the month of November. In the case of Montevideo -which is the main market with more than 75% of current contracts-, the average rental price rose almost 6% annually.
In that same period the wages They rose 10%, so that the purchasing power of salaries with respect to rents improved by 4%. In other words, the price of rentals in terms of salary fell 4% in the last year to November.
This trend has been occurring since the end of 2019, even despite the moderation in salary increases during the Covid-19 pandemic. Indeed, between June 2020 and June 2021, salaries (according to the Average Salary Index from the INE) rose 7%, while rents in Montevideo increased 6%, on average. It should be noted that this value is an average of the thousands of current contracts registered in the Rental Guarantee Service (SGA) of the General Accounting Office of the Nation Ministry of Economy and Finance (MEF)and administrative records of rental guarantee of the National Association of Affiliates (ANDA)which total more than 85,000 contracts.
It is possible that in recent years the market structure in terms of the type of rented housing has had some changes, for example, with greater weighting of studio apartments or other similar changes; However, these changes are usually not of such magnitude as to alter major trends.
Rent or buy?
While the purchasing power of wages regarding the rentals has been improving in recent years, the relationship between salaries and housing prices has moved differently. Although in recent years, with the salary recovery, this relationship has improved, between 2019 and until the beginning of 2022 the average price of housing in Montevideo evolved above the salary. In other words, more and more salaries were necessary to buy a home. In this sense, and based on the aforementioned statistics, it has been more convenient to rent than to buy in recent times.
Housing for sale/salaries ratio
This happens despite the fact that there is an increase in the supply of housing at all levels, while at the same time there is a credit expansion. The increase in the supply of real estate can occur through various means and one of the main ones is Promoted Housing programthrough which certain housing investment projects that meet certain conditions are exempt from taxes.
One of them is that they are located in certain areas where there is interest development real estate, outside the most valuable coastal places and seeking to develop city, services and urban density. This program promoted by the Association of Construction Promoters (APPCU) and specified in the housing law promoted in 2011, has already accumulated more than 1,500 projects presented, with almost 39,000 homes, of which almost 18,000 have already been sold and the rest is under construction or in project.
Likewise, there is an increase in mortgage credit by the banks, which went from US$2,570 million in 2019 to US$3,325 million in 2023. In real terms (converted to pesos and discounting the inflation) is a real increase in credit close to 5%.
Another important way of investing in housing is cooperative system. According to data from the ANV, between March 2020 and October 2023, 179 cooperatives were completed, with 5,071 homes. Another 200 cooperatives with 6,561 homes are under construction throughout the country.
Housing construction in all its forms is key in the employment generationin such a way that employment in construction has been sustained despite the completion of the construction works UPM 2 and of Central Railway. In addition to promoted housing projects and cooperatives, numerous high-level projects are being launched in Maldonadoin addition to road works and other infrastructure works, which also generate construction jobs.
According to him BPS Statistical Observatorythe number of contributing positions in this sector went from almost 97,000 last June to more than 101,000 in November.
Source: Ambito
