why properties are so expensive in Peru ?

Answers to your qestions about moving to, and living in, Peru,
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windsportinperu
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why properties are so expensive in Peru ?

Postby windsportinperu » Tue Aug 16, 2011 10:56 am

I have been trying to understand with no great results why properties in Peru are so expensive, specially in big cities as LIma, Arequipa, Cusco, Trujillo, Piura, Chiclayo.. and so on..

A house in France :

http://www.rightmove.co.uk/overseas-property/property-30817252.html 124,000 usd

A ""house"" in Cusco :

http://articulo.mercadolibre.com.pe/MPE-17162128-vendo-casa-como-terreno-_JM 105000 usd

There is no point of comparison between the great house in France vs the ugly rotten house in Cusco.. Why such a great difference ?


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Re: why properties are so expensive in Peru ?

Postby Alpineprince » Tue Aug 16, 2011 11:12 am

Shorter commute!
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Re: why properties are so expensive in Peru ?

Postby jimmyglen » Tue Aug 16, 2011 1:56 pm

in my opinion prices in Peru are way out of whack (high)

and prices in the U.S are way out of whack (low)

I dont anything about Europe

The cost of a house should be somewhat relative to the price it rents for - *SHOULD BE*

in the US I can buy a house for $40,000 that rents for $750 a month (thats out of whack)

in Peru what does a $40,000 unit rent for - $250?

I know its all about the area but the rents and home value used to be somewhat in line

A person cannot predict the future but the time to SELL in Peru could be now (or it could go higher)

and the time to BUY in the U.S is now (the bottom is in - or very close to it)

in the U.S its cheaper to own than rent and in Peru I think its cheaper to rent than own

you can never catch the very bottom or the very top in any market but if I owned property in Peru I would be selling - but you never know


why is it this way??? world markets are all crazy right now
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Re: why properties are so expensive in Peru ?

Postby sunflower » Tue Aug 16, 2011 9:10 pm

jimmyglen wrote:
... in Peru I think its cheaper to rent than own



I have to disagree. At least renting in Lima in a good neighborhood is ridiculous. For a house including the typical Lima issues with 3 or 4 bedrooms and a small garden prices are starting at around US$ 1200 to US$ 1500. But prices for buying went up in the last 3 or 4 years immensely as well. I'm always asking myself how normal people can afford this prices. We are at our limit at the moment.
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Re: why properties are so expensive in Peru ?

Postby tupacperu » Wed Aug 17, 2011 3:10 pm

According to an article in Andina.pe, Lima is one of the cheapest places to live in Latin
America.
I don't know where they get these stats.

http://www.andina.com.pe/Ingles/Noticia ... Im0G9D6FQ=
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Re: why properties are so expensive in Peru ?

Postby Alpineprince » Wed Aug 17, 2011 3:52 pm

I do not think the article says that at all. :?
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Re: why properties are so expensive in Peru ?

Postby Chucky » Wed Aug 17, 2011 4:20 pm

The article is vague in its reference to the "level of prices and services" analyzed. The conclusion that Lima has a low cost of living doesn't necessarily speak to the price of property relative to other cities.
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Re: why properties are so expensive in Peru ?

Postby Alpineprince » Wed Aug 17, 2011 4:21 pm

mayantecca wrote:
Alpineprince wrote:I do not think the article says that at all. :?


In which way?

Mostly, when I hold my computer upside down!

But, when you take into account that the only LATAM cities included in the study ( Sao Paulo, Rio de Janeiro,Lima, Mexico City, Santiago de Chile, Bogotá and Buenos Aires) I hardly think you could conclude that Lima is one of the cheapest places to live in ALL OF LATIN AMERICA!
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Re: why properties are so expensive in Peru ?

Postby Alpineprince » Wed Aug 17, 2011 4:59 pm

Chucky wrote:The article is vague in its reference to the "level of prices and services" analyzed. The conclusion that Lima has a low cost of living doesn't necessarily speak to the price of property relative to other cities.

While the actual study ( which I have read) does help explain. One of the more salient tidbits is that NET salaries in Lima are 34% of those in NYC and therefore you might conclude that the 80sqm in Miraflores could one day be worth $300,000.00 or 819,000 soles for those that expect the Dollar to implode!

Although, not from this survey Rio is now more expensive than NYC and is home to the $6.16 Big mac and my favorite the $35.00 Martini!
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Re: why properties are so expensive in Peru ?

Postby Chucky » Wed Aug 17, 2011 6:26 pm

Alpineprince wrote:
Chucky wrote:The article is vague in its reference to the "level of prices and services" analyzed. The conclusion that Lima has a low cost of living doesn't necessarily speak to the price of property relative to other cities.

While the actual study ( which I have read) does help explain. One of the more salient tidbits is that NET salaries in Lima are 34% of those in NYC and therefore you might conclude that the 80sqm in Miraflores could one day be worth $300,000.00 or 819,000 soles for those that expect the Dollar to implode!

Although, not from this survey Rio is now more expensive than NYC and is home to the $6.16 Big mac and my favorite the $35.00 Martini!


A reasonable conclusion as long as America continues to "coddle the rich" (see Buffet's latest comments) and ignore the real problem which is the shrinking middle class. Gin or vodka?
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Re: why properties are so expensive in Peru ?

Postby Alpineprince » Wed Aug 17, 2011 7:50 pm

All politics aside, Buffets suggestion will at most raise $350 billion over ten years and I am all for it. In the final analysis it has always been and will always be the middle class that will be responsible for the debts of America, or for that matter the world. I believe that those of us with insight took all our money out of our respective countries ( before it was popular) and invested it in Peru or other similar countries. The damage that has been done to the US economy since George 1 and more importantly the last 3 years, while daunting can be easily corrected if the populace embraced the austerity and lower standard of living necessary to bring (asset) price levels back to the mid 80's.

Edited to include: EUROPE IS TOAST!
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Re: why properties are so expensive in Peru ?

Postby Chucky » Wed Aug 17, 2011 9:53 pm

I wish I had that type of foresight - your decision was a sound one, at least at this point in time. The path back to a more austere American lifestyle is only complicated by the fact that Congress represents BIG INTERESTS, not the middle class, so until something is done about that very complicated problem, hard times will likely continue. In any event, it looks like China is looking to invest heavily in Peru so I think it might be wise to follow their lead. :)
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Re: why properties are so expensive in Peru ?

Postby MarcoPE » Thu Aug 18, 2011 12:44 pm

sunflower wrote:For a house including the typical Lima issues with 3 or 4 bedrooms and a small garden prices are starting at around US$ 1200 to US$ 1500. But prices for buying went up in the last 3 or 4 years immensely as well. I'm always asking myself how normal people can afford this prices. We are at our limit at the moment.


and that price is even getting harder to find.
Last edited by MarcoPE on Thu Aug 18, 2011 10:35 pm, edited 1 time in total.
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Re: why properties are so expensive in Peru ?

Postby Alpineprince » Thu Aug 18, 2011 1:30 pm

Chucky wrote: In any event, it looks like China is looking to invest heavily in Peru so I think it might be wise to follow their lead. :)

It's the old Wall Street adage: Buy what China buys and sell what China sells!
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Re: why properties are so expensive in Peru ?

Postby kristidnyc » Wed Aug 31, 2011 9:52 pm

jimmyglen wrote:in the US I can buy a house for $40,000 that rents for $750 a month (thats out of whack)

in Peru what does a $40,000 unit rent for - $250?


I'm very curious to know where in the US you can buy a property for $40K and rent for $750/month. I want to go shopping there!

My personal (actual) experience is you can buy an apartment in Lima for $90,000 and rent for $750. And in the US (New York City) you can buy an apartment for $400,000 and rent for $2,000. In that case the Peruvian apartment is a much better deal.
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Re: why properties are so expensive in Peru ?

Postby rama0929 » Wed Aug 31, 2011 9:59 pm

kristidnyc wrote:
jimmyglen wrote:in the US I can buy a house for $40,000 that rents for $750 a month (thats out of whack)

in Peru what does a $40,000 unit rent for - $250?


I'm very curious to know where in the US you can buy a property for $40K and rent for $750/month. I want to go shopping there!


Western & Central NY has plenty of cheap housing. Buffalo, the Tonawandas, Niagara Falls, Rochester, Syracuse, etc, etc, etc.
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Re: why properties are so expensive in Peru ?

Postby MarcoPE » Wed Aug 31, 2011 10:01 pm

kristidnyc wrote:
jimmyglen wrote:in the US I can buy a house for $40,000 that rents for $750 a month (thats out of whack)

in Peru what does a $40,000 unit rent for - $250?


I'm very curious to know where in the US you can buy a property for $40K and rent for $750/month. I want to go shopping there!

My personal (actual) experience is you can buy an apartment in Lima for $90,000 and rent for $750. And in the US (New York City) you can buy an apartment for $400,000 and rent for $2,000. In that case the Peruvian apartment is a much better deal.


Well, NYC is totally different from MOST of of the rest of the US. Please, use logical intellect and your "personal experience" may need to be updated because, even in the worst sections of Lima, $90,000 may get you a small chunck of land, but apartments in a nice area will run $200,000.
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Re: why properties are so expensive in Peru ?

Postby kristidnyc » Wed Aug 31, 2011 10:23 pm

MarcoPE wrote:
kristidnyc wrote:
jimmyglen wrote:in the US I can buy a house for $40,000 that rents for $750 a month (thats out of whack)

in Peru what does a $40,000 unit rent for - $250?


I'm very curious to know where in the US you can buy a property for $40K and rent for $750/month. I want to go shopping there!

My personal (actual) experience is you can buy an apartment in Lima for $90,000 and rent for $750. And in the US (New York City) you can buy an apartment for $400,000 and rent for $2,000. In that case the Peruvian apartment is a much better deal.


Well, NYC is totally different from MOST of of the rest of the US. Please, use logical intellect and your "personal experience" may need to be updated because, even in the worst sections of Lima, $90,000 may get you a small chunck of land, but apartments in a nice area will run $200,000.


I realize that NYC is a different animal than the rest of the US. But having looked at investing in properties in the US - also outside of NY/NJ/CT - I haven't found anything priced at $40K that can actually rent for $750, but I am honestly and truly interested in where you can find these kind of properties.

Also, we bought a newly constructed 3BR apartment on the Barranco/Miraflores border a few months ago, at $83K, including parking. So it's not impossible to find good deals, you just have to find them.
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Re: why properties are so expensive in Peru ?

Postby kristidnyc » Wed Aug 31, 2011 10:24 pm

Oh, and I wanted to add that I do agree that properties in Lima ARE very expensive when compared to incomes.
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Re: why properties are so expensive in Peru ?

Postby jimmyglen » Thu Sep 01, 2011 6:36 am

here is one you can buy for probably $25,000

you might need to put another $10 into it

it would rent for around $750

http://www.realtor.com/realestateandhom ... source=web


Not in a bad area at all - St. Louis, MO suburb
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Re: why properties are so expensive in Peru ?

Postby windsportinperu » Thu Sep 01, 2011 8:36 am

Does anyone has an answer to the original question ? I have some clues as "speculation of prices" , but this by itself can't explain the price gap

In Peru we use to say: "casado casa quiere" .. it is when you get married and one of the most important thing you want is having your own house and the people is determined to work hard to obtain their property..
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Re: why properties are so expensive in Peru ?

Postby Kelly » Thu Sep 01, 2011 9:39 am

My guess is that incomes are rising in Peru, so there are more people looking for property. That plus easier credit means there are more people wanting to buy than there are properties for sale. More demand than supply = higher prices.

Add on to that developers who are happy to pay a high price for a single home when they know they can demolish it and build 8 depos on the land that'll all sell for way more than their worth, and it's easy to see why properties are so expensive.
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Re: why properties are so expensive in Peru ?

Postby el conquistador » Thu Sep 01, 2011 3:56 pm

I just bought a flat in Villa El Salvador. The flat is brandnew. Actually it isn't ready yet. The building will be completed in the beginning of 2012. The flat has 3 double bedrooms, 1 bathroom, salla comedor and kitchen. The building has only 5 floors.
The area is nice. It's located opposite Mercado Unicachi and only 5 minutes from the new METRO. (not the supermarket but the train.) The condominium will have parks, 24h security, laundry rooms and internet local.

The flats are finished to high standards and similar to those that are sold in San Isidro and Miraflores. But at a much lower price. The area is improving a lot. More building will be build in the near future.

I paid 78000 soles.

http://laencontre.terra.com.pe/anuncio/ ... l-salvador

http://www.bbvabancocontinental.com/tlp ... umbloque=1
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Re: why properties are so expensive in Peru ?

Postby windsportinperu » Thu Sep 01, 2011 4:11 pm

Elconquistador, let me tell you that you have made a good investment. Those properties tend to revalue a lot with the past of the years..
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Re: why properties are so expensive in Peru ?

Postby el conquistador » Thu Sep 01, 2011 4:15 pm

windsportinperu wrote:Elconquistador, let me tell you that you have made a good investment. Those properties tend to revalue a lot with the past of the years..


Sure, they will.

If I had the money, I would have bought one or two more and rent them out.

Villa El Salvador is the up and coming district of Lima. The government has only recently begun with investing and improving this area. The new METRO train is an excellent example. Before it took more than an hour to get to Surco, San Borja or Miraflores. Now with the new train it only takes minutes. Roads are getting paved too.

Villa El Salvador has also a 'village' mentality. People talk to their neighboors and people greet each other on the street and people help out in their neigbourhood wherever they can.

And high quality properties are still affordable.

http://www.bbvabancocontinental.com/tlp ... umbloque=1
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Re: why properties are so expensive in Peru ?

Postby jimmyglen » Thu Sep 01, 2011 5:53 pm

the one I posted in St Louis is actually kind of a rough area - but you can do better if you look around and low ball offer (cash is king right now)

but here is one out in the country (1.5 hours from St Louis) but only 15 mintues from a small town with a Wal Mart etc

and maybe 30 min to a town with multiplex - chain restaurants etc

it has 1 acre ground on a paved road - this is an un real deal for some one who wants to retire

the price $19,900

http://www.realtor.com/realestateandhom ... source=web
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Re: why properties are so expensive in Peru ?

Postby kristidnyc » Tue Sep 06, 2011 9:13 pm

jimmyglen wrote:but here is one out in the country (1.5 hours from St Louis) but only 15 mintues from a small town with a Wal Mart etc

and maybe 30 min to a town with multiplex - chain restaurants etc

it has 1 acre ground on a paved road - this is an un real deal for some one who wants to retire

the price $19,900

http://www.realtor.com/realestateandhom ... source=web


Cool. And you can rent it for decent money to decent people? That's unbelievable.
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Re: why properties are so expensive in Peru ?

Postby kristidnyc » Tue Sep 06, 2011 9:33 pm

Kelly wrote:My guess is that incomes are rising in Peru, so there are more people looking for property. That plus easier credit means there are more people wanting to buy than there are properties for sale. More demand than supply = higher prices.

Add on to that developers who are happy to pay a high price for a single home when they know they can demolish it and build 8 depos on the land that'll all sell for way more than their worth, and it's easy to see why properties are so expensive.


I think you're pretty much on the money. As long as there is a higher demand than supply, the prices will go up. For some reason people are willing to buy apartments for crazy prices right now.

However, many people are buying for investment right now. In most new buildings you will see signs for "Alquiler" in 20-30% of the windows. This means that there will soon be an overflow of rental apartments - especially in Miraflores. Which means that people who have bought apartments might not be able to pay their mortgage. Which means that the properties will go back to the bank. Which means that the prices will drop. And the bubble has burst.

I think there's a false sense of security among the Peruvians right now. For the first time in 30 years they have buying power, and they want to buy. Lots. Nice car, nice apartment, nice clothes, etc. Some people are making a lot f money, true, but some people are just spending because they can buy on credit.

If you look at how people are buying in the stores, then you will see 90% are paying with credit cards. Which means they are already more or less in debt (well, most of them).

If you own property in Peru (as an investment) now is the time to sell. Definitely not the time to buy.

The housing market HAS to fall. If not this year, then soon enough. But prices in Lima will never be as low as in a small town in any other country. Why? Because it's the capital.
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Re: why properties are so expensive in Peru ?

Postby el conquistador » Tue Sep 06, 2011 9:50 pm

kristidnyc wrote:

I think there's a false sense of security among the Peruvians right now. For the first time in 30 years they have buying power, and they want to buy. Lots. Nice car, nice apartment, nice clothes, etc. Some people are making a lot f money, true, but some people are just spending because they can buy on credit.

If you look at how people are buying in the stores, then you will see 90% are paying with credit cards. Which means they are already more or less in debt (well, most of them).

If you own property in Peru (as an investment) now is the time to sell. Definitely not the time to buy.

The housing market HAS to fall. If not this year, then soon enough. But prices in Lima will never be as low as in a small town in any other country. Why? Because it's the capital.



I've seen the same in Ireland. Ireland went from being the poorest country and the cheapest country in Western Europe to almost the richest and most expensive country in less than 10 years time. But now Ireland is bankrupt. Ireland now had to borrow money from other countries. The economy crashed and they never had such a high unemployment rate. They will recover but it will take a long time.

I am sure prices will go up for another time in Peru and houseprices will still go up a lot but suddenly when there are no more people able to buy a such high prices and people can no longer get credit that easily then it will a burst and prices will drop considerably.

I was thinking of selling my home in the beginning of this year and people adviced me not to sell but wait till after the elections because property prices will go up a lot...and they were right, prices went up a lot, but also the prices of food and other goods.
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Re: why properties are so expensive in Peru ?

Postby Peace2009 » Wed Sep 07, 2011 1:00 am

Lima a city of 9 million people with VERY LIMITED high quality housing. The supply and demand decides this high price level.

Do not compare Peru to other western countries. Western countries depend on Pseudo economy called "service", and a social security network they cannot afford (thus the insane borrowing in Europe, while brainwashing everyone of the superiority of the European system). Peru on the other hand is a country flush with cash from its resource exploration. The miners then transfer this cash to Lima and raise the real estate price, which in turn boosts other parts of the economy. The Peruvian government runs at almost a balance, with a national debt level less than 20% of the GDP.

If anything, I think the the only way the property price here is going up, especially in dollar terms as the U.S dollar printing machines are churning out greens at full speed right now.
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Re: why properties are so expensive in Peru ?

Postby MarcoPE » Wed Sep 07, 2011 7:19 am

kristidnyc wrote:I think you're pretty much on the money. As long as there is a higher demand than supply, the prices will go up. For some reason people are willing to buy apartments for crazy prices right now.

However, many people are buying for investment right now. In most new buildings you will see signs for "Alquiler" in 20-30% of the windows. This means that there will soon be an overflow of rental apartments - especially in Miraflores. Which means that people who have bought apartments might not be able to pay their mortgage. Which means that the properties will go back to the bank. Which means that the prices will drop. And the bubble has burst.

I think there's a false sense of security among the Peruvians right now. For the first time in 30 years they have buying power, and they want to buy. Lots. Nice car, nice apartment, nice clothes, etc. Some people are making a lot f money, true, but some people are just spending because they can buy on credit.

If you look at how people are buying in the stores, then you will see 90% are paying with credit cards. Which means they are already more or less in debt (well, most of them).


Excellent points. I can't tell you how many times I have been in line at Saga, Ripley, etc and had people in line in front of me buying as little as a single item (a bed covering for example), and actually splitting it among 5 different cards. It really is a house of cards :wink:
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Re: why properties are so expensive in Peru ?

Postby goingnowherefast » Wed Sep 07, 2011 10:13 am

Peru is also one of the few countries in the world where foreigners can own land under their own name which I'd think would put prices a little higher.
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Re: why properties are so expensive in Peru ?

Postby el conquistador » Wed Sep 07, 2011 3:14 pm

goingnowherefast wrote:Peru is also one of the few countries in the world where foreigners can own land under their own name which I'd think would put prices a little higher.


Sure, in some areas popular by foreign buyers prices will be beefed up.

Like in many places in Southern Spain, Portugal and Turkey where locals are priced out because people from the richer European countries buy up most properties.

I watch often househunters international where people go buying houses in places like Turkey, the Carribean, Costa Rica and have often 100000's of dollars to spend. Very few locals in those countries would be able to spend that much.
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Re: why properties are so expensive in Peru ?

Postby thjohnson58 » Sat Feb 02, 2019 11:56 am

Hello
I am brand new here. Two answer a question someone asked about American properties that you can buy and rent at a reasonable rate. I was born and live in Florida. My wife to be is Peruvian (La Punta) living in the states for many years. Looking at property over here in Peru is insane. I can buy a two bedroom two bath house on the water with deep canal access to the Gulf for $300,00! 5 years ago is was $200,00

Yes in my area you can buy for 45 to 75K and rent for $750 to $1200 a month. I live North of Tampa, FL
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Re: why properties are so expensive in Peru ?

Postby Alan » Sat Feb 02, 2019 1:00 pm

I was speaking with a builder the other day. She is on her 4th building in 10 years. She told me that building costs have increased a lot recently because of new safety codes that require new buildings to have sprinkler systems (which requires a reserve tank, piping, and pumps), steel doors to the stairways, higher grade wiring and a ventilation system to take out smoke (another pump) and natural gas connectivity (even if no one will use natural gas). Besides higher building costs, the economy continues to grow (4% last year), and we have a large young population (average age is 25), both of which push demand higher.

Of course, what makes housing even more expensive are the high mortage rates here. 9% is the norm, more than twice what it is the USA. Terrible.

Apparently the housing sector that is moving the quickest are small apartments in the $100,000 range in districts like Jesus Maria. Tiny places in huge buildings, but at least young families can begin building equity by getting a piece of something.
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Re: why properties are so expensive in Peru ?

Postby Slippin' Jimmy » Sun Feb 03, 2019 11:23 am

With high interest rates home prices should be low.
Think of it like a seesaw.
If they're both high then something is wrong.
In the U.S., the govt is keeping rates low so home prices continue to be high.
It's their attempt to prop up the housing market instead of letting economic nature take its course and collapse it.
But it's futile because the latest housing bubble has burst (late 2017/early 2018) and more houses are sitting on the market unsold.
Why? Because they're overpriced and sellers are petrified they aren't gonna get top dollar.
A saver and a cash buyer hates to see low interest rates.
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Re: why properties are so expensive in Peru ?

Postby Alan » Mon Feb 04, 2019 10:34 am

Slippin' Jimmy wrote:With high interest rates home prices should be low.
Think of it like a seesaw.
If they're both high then something is wrong.
In the U.S., the govt is keeping rates low so home prices continue to be high.
It's their attempt to prop up the housing market instead of letting economic nature take its course and collapse it.
But it's futile because the latest housing bubble has burst (late 2017/early 2018) and more houses are sitting on the market unsold.
Why? Because they're overpriced and sellers are petrified they aren't gonna get top dollar.
A saver and a cash buyer hates to see low interest rates.



I´ve heard that interest rates are naturally 4% higher, more or less, than the USA, due to issues like country risk. It's doubtful that they will drop much more anytime soon, at least in dollars. On the upside, 8 years ago, mortages were closer to 13% in dollars here. Ouch.
rudder
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Re: why properties are so expensive in Peru ?

Postby rudder » Mon Mar 18, 2019 1:24 pm

What are some resources to learn more about this topic in Peru?

I still mostly see stuff outside the avg Peruvian’s price range even in the provinces.

Yet recently some real estate guy on this forum has said the market has cooled.

I suspect there must be a lot of foreign ownership from wealthy speculators. Is there any hope for the average Peruvian to get that dream home in the near future. Will prices drop to reasonable enough levels.

I was encouraged to learn that you actually have to at least be a Peruvian permanent resident to participate in the foreclosure trades. (Remate judicial)
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adrian Thorne
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Re: why properties are so expensive in Peru ?

Postby adrian Thorne » Tue Mar 19, 2019 6:54 am

rudder wrote:What are some resources to learn more about this topic in Peru?

I still mostly see stuff outside the avg Peruvian’s price range even in the provinces.

Yet recently some real estate guy on this forum has said the market has cooled.

I suspect there must be a lot of foreign ownership from wealthy speculators. Is there any hope for the average Peruvian to get that dream home in the near future. Will prices drop to reasonable enough levels.

I was encouraged to learn that you actually have to at least be a Peruvian permanent resident to participate in the foreclosure trades. (Remate judicial)


Try this http://rematestributarios.sunat.gob.pe/index.php/component/zoo/advanced-search/42?Itemid=101&fbclid=IwAR1G7hhLp7Vey2YlW0SMGg-8b2EkMQtkijruzmB4tHc_HXdY_Wy4XuVKF-I

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