Argentina is facing a severe economic crisis, and its currency, the peso, has depreciated by more than 50% against the US dollar in the past year, leading to prices and people's livelihoods. Among them, the rental market in the capital Buenos Aires has been hit by a huge impact, with rents increasing nearly tenfold in just a few months, making them unaffordable for many citizens.
According to data released by the National Institute of Statistics and Census of Argentina, in November 2023, Argentina's inflation rate reached 120%, half of the cumulative inflation rate in the past 12 months. Among them, housing and utilities accounted for 146%, the largest increase of all categories. And in terms of housing, renting is even more staggering, from an average of 4 per month in April this year60,000 pesos, an increase of 769% to an average of 400,000 pesos per month in November.
This kind of rent** is unaffordable for the average citizen of Argentina. According to the National Institute of Statistics and Censuses of Argentina, in November 2023, the minimum wage in Argentina was $3 per month60,000 pesos, while the average salary in the capital, Buenos Aires, is 6 per month50,000 pesos. This means that even average income earners in the capital spend 62% of their income to pay for renting, while the lowest incomes simply can't afford it.
There are several main reasons why the rental market in Argentina is in this situation:
Imported inflation due to exchange rate depreciation. Argentina's economy is highly dependent on imports, especially energy, food, and means of production. Due to the constant exchange rate of the peso against the US dollar**, the cost of imports is rising, leading to a price level**, which in turn pushes up the cost of renting. According to the National Institute of Statistics and Census of Argentina, in November 2023, Argentina's import** index increased by 185% year-on-year**.
Demand-based inflation caused by over-issuance of money. In response to the economic crisis and the increase in spending on social welfare, Argentina** printed a large amount of money, resulting in a sharp increase in the amount of money** that exceeded market demand. According to the Central Bank of Argentina, in November 2023, the volume of money in Argentina (M2) increased by 82% year-on-year. The over-issuance of currency has caused currency depreciation and inflation, which has weakened the purchasing power of citizens and increased the demand for rent.
There is an imbalance between supply and demand in the real estate market. The real estate market in Argentina has been affected by multiple factors, resulting in an imbalance between supply and demand. On the one hand, due to the economic crisis and the credit crunch, the confidence of property developers and investors is low, and the number of newly built homes has decreased, ** tight. According to the National Institute of Statistics and Census of Argentina, in November 2023, the construction activity index in Argentina decreased by 18% year-on-year. On the other hand, due to exchange rate depreciation and inflation expectations, many citizens use the US dollar and real estate as safe-haven assets and are reluctant to rent or rent, resulting in a shortage. In November 2023, home sales in the capital Buenos Aires fell by 35% year-on-year, and rentals fell by 28% year-on-year, according to the Argentine Association of Realtors.
* Policy uncertainty and discontinuity. Argentina's lack of coherence and continuity in its response to the economic crisis has often introduced short-term, contingency, and even contradictory policies, bringing uncertainty and chaos to the market. For example, in September 2022, Argentina** introduced a measure to freeze rents and suspend evictions, aiming to protect the rights and interests of tenants, but this measure caused dissatisfaction and revolt from landlords, resulting in more scarcity and more**rent. In addition, Argentina** has also introduced some policies such as restricting foreign exchange transactions, imposing export taxes, and control** in an attempt to stabilize the exchange rate and prices, but these policies have undermined the freedom and efficiency of the market, and weakened the competitiveness and vitality of the economy.
Argentina's rental crisis has had a serious impact on its economy and society. On the one hand, the cost of renting reduces the living standards and happiness of citizens, increases poverty and inequality, and triggers social dissatisfaction. On the other hand, the cost of renting also affects the consumption and investment of citizens, inhibits the recovery and development of the economy, and exacerbates the predicament and crisis of the economy.