The Price Boom is Over !!!

[DC_20833]

I have been in Peru for 11 years and the price of housing boomed until 2 years ago. It is now a buyer's market. I paid $450,000.00 in September of 2016 for a 3-bedroom apartment which is 1937.504 square feet and I would get today around $400,000.00. What drives the Peruvian economy is precious metal prices and they are way down so it is now a buyer's market. I spoke with a realtor and she said the prices will remain down for the next ten years.

[jumpinjack]

WOW!!

[Slippin' Jimmy]

I have been in Peru for 11 years and the price of housing boomed until 2 years ago. It is now a buyer's market. I paid $450,000.00 in September of 2016 for a 3-bedroom apartment which is 1937.504 square feet and I would get today around $400,000.00. What drives the Peruvian economy is precious metal prices and they are way down so it is now a buyer's market. I spoke with a realtor and she said the prices will remain down for the next ten years.

Looks like you got rear ended on that deal.
50 grand in the hole.
Better turn slumlord and try to recoup your loss.

[alan]

Actually, the price of metals is back up, thank goodness. Agro is strong, too and foreign direct investment is also gaining speed. It's not as bad as it feels.

copper prices.png (6.08 KiB) Viewed 5269 times

[Alpineprince]

I will concede that the price boom is over for now, but I also disagree with your methodology. They always say "You make money in RE when you buy, not when you sell"! 11 years ago,everybody I know was buying up property, why did you wait 11 years?

[Formidable 1]

I will concede that the price boom is over for now, but I also disagree with your methodology. They always say "You make money in RE when you buy, not when you sell"! 11 years ago,everybody I know was buying up property, why did you wait 11 years?

Maybe the OP didn't have the monetary resources to make a purchase 11 years ago.

[SilverbackPeru]

I never understood how any of these house prices were acceptable at the time. $450,000 is way too much money for a three bedroom apartment in Lima I always thought. But what can you do, people were willing to pay those prices.

I don't think the economy is going to crash as it's more diverse now but i can only see those house prices going down a bit more maybe in the future until things get balanced out a bit more.

[DC_20833]

Actually, the price of metals is back up, thank goodness. Agro is strong, too and foreign direct investment is also gaining speed. It's not as bad as it feels.

copper prices.png

Actually, Alan is correct what is driving the price drop is the corruption. Look at President Pedro Pablo Kuczynski he barely survived an impeachment vote tonight. Foreign Investment is what drives Peru and who would want to invest here. The Odebrecht scandal is hitting every South American country. Look at Peru every ex-President is in Jail. Read this to find out more information: https://www.washingtonpost.com/world/the_americas/perus-president-faces-impeachment-over-corruption-allegations/2017/12/20/61b2b624-e4d9-11e7-927a-e72eac1e73b6_story.html?utm_term=.c5d88f873b43

[DC_20833]

I have been in Peru for 11 years and the price of housing boomed until 2 years ago. It is now a buyer's market. I paid $450,000.00 in September of 2016 for a 3-bedroom apartment which is 1937.504 square feet and I would get today around $400,000.00. What drives the Peruvian economy is precious metal prices and they are way down so it is now a buyer's market. I spoke with a realtor and she said the prices will remain down for the next ten years.

Looks like you got rear-ended on that deal.
50 grand in the hole.
Better turn slumlord and try to recoup your loss.

I didn't do my homework like I have done on other purchases. At one time, I owned a lot of apartments here and rented them out. I sold them 2 years ago because I saw the price boom was ending. I will just wait out the storm for my current apartment.

[toughrider]

I never understood how any of these house prices were acceptable at the time. $450,000 is way too much money for a three bedroom apartment in Lima I always thought. But what can you do, people were willing to pay those prices.

I don't think the economy is going to crash as it's more diverse now but i can only see those house prices going down a bit more maybe in the future until things get balanced out a bit more.

It's cheaper to buy a new apartment than a second hand one.
If you buy a ''pre venta'' apartment, you get often a big discount. And you will be the first one who will be using the loo too.
There are all the time new apartment buildings popping up all over Lima.

[SilverbackPeru]

I never understood how any of these house prices were acceptable at the time. $450,000 is way too much money for a three bedroom apartment in Lima I always thought. But what can you do, people were willing to pay those prices.

I don't think the economy is going to crash as it's more diverse now but i can only see those house prices going down a bit more maybe in the future until things get balanced out a bit more.

It's cheaper to buy a new apartment than a second hand one.
If you buy a ''pre venta'' apartment, you get often a big discount. And you will be the first one who will be using the loo too.
There are all the time new apartment buildings popping up all over Lima.

Yeah but they are still way over priced against the average income. The average household income in Lima is $600-$700 a month. Those new homes are usually at least well over $100'000.

[mrsteak]

I never understood how any of these house prices were acceptable at the time. $450,000 is way too much money for a three bedroom apartment in Lima I always thought. But what can you do, people were willing to pay those prices.

he he he

They are not willing to pay these prices, they are tricked into buying that overpriced crap by rtors, bank mortage departments, construction companies, and so on telling them more ahead it will be more expensive. But nope! I predict a never seen crash of the peruvian RE, in the next few years. It is still very far from a buyer's market! Do NOT buy now!
The prices will be down to where they should be. You will pay 50-60.000 USD for a seaview apartment in Miraflores by 2023-2025.

If you want to invest in real buyer's market, buy a house NOW in Venezuela! Yeah Venezuela! Buy when the canons fire!!!

[mrsteak]

The metal prices are on a slide down btw. We will see a global oil market collapse somewhere around 2025 and as consequence deglobalisation and fall of the industrial economies.

Buy your land, buy your cows and chickens, buy your mule and horse and learn how to plow and grow crops. And do not forget your stockpile of guns and ammo, you will need it.

[cwcdavid]

So another year is over [almost].

Any change in direction or stagnating market with stock levels rising? [I am in London where that is broadly true but ... special 'circumstances' here atm] ... in Lima I haven't been watching.

[Alpineprince]

It's a good time to sell, prices in my neighborhood have jumped alot recently!

[alan]

Gestion newspaper yesterday had an article about how prices are up in most areas. Price of copper is back up, agro is strong, the economy just clicks along in spite of it all. Sure be nice if the country risk would drop so mortgages might become a little cheaper.

[Wiracocha]

G'day all,

Does anyone think that maybe,just maybe, the high housing prices have been caused by us lot coming to Peru and paying over-the-top prices in the first place?
I think we all know/suspect that prices rise on sight of a gringo !!
The achievement of the initial inflated prices gave sellers/developers etc. the motivation to ask for even higher prices .
About the only things that will take the heat off are the raising of mortgage rates and the rate of unsuccessful sales growing. Happens!!
I've been here a few times and have only actually lived here now 1 1/2 years...so maybe I haven't got my thinking straight yet.
Thinking out loud.
Cheers,
W

[Alpineprince]

Not enough of us here to even move the needle!

[SilverbackPeru]

As Alpine said, barely enough gringos to make any impact. The people buying the expensive houses and apartments are rich Peruvians who are making a lot more money than most of the gringos who move here from businesses involved in Perus natural resouces.

You'll have a few gringos down there working in the same line of work but the company they work for will probably be paying for their accommodation.

Luxury property is a good way of cleaning illegal money (same as high end casinos and hotels) so there could be a little bit of truth when people say prices are being pushed up cos of the drug trade.

[alan]

Luxury property is a good way of cleaning illegal money (same as high end casinos and hotels) so there could be a little bit of truth when people say prices are being pushed up cos of the drug trade.

That's a good point. According to this article, nearly 50% of illegal money is laundered through real estate.
https://rpp.pe/economia/economia/los-pr ... ia-1029215

It's not just drug money though. Money from corruption and informal mining represent an even higher percentage of the total.

[Alpineprince]

Any ideas on where to advertise to reach this market?

[SilverbackPeru]

Luxury property is a good way of cleaning illegal money (same as high end casinos and hotels) so there could be a little bit of truth when people say prices are being pushed up cos of the drug trade.

That's a good point. According to this article, nearly 50% of illegal money is laundered through real estate.
https://rpp.pe/economia/economia/los-pr ... ia-1029215

It's not just drug money though. Money from corruption and informal mining represent an even higher percentage of the total.

It's why all those rich foreign billionaires love London and why real estate has gone up so much there.

This leads to the younger generations having to move out of London as they can't afford property to counties outside of London which then pushes local people from those counties out of them counties in search of somewhere cheap. Unfortunately you're starting to see folk from Essex areas coming up north just to survive cos of how cheap it is here. It's pretty funny seeing their faces when they realise how cheap a pint is! Or a house for that matter!!

You can't but think if similar things will happen in Lima. Some of the property prices i've seen for nicer areas in Lima are just plain bonkers!

[alan]

Any ideas on where to advertise to reach this market?

Some of the government channels on television?

[PRL.1206]

Good.

Most people make $250 a month or less.

There should be a limit on property ownership. 1 home is allowed but all other homes should be repossessed and given to the poor.

$400000 for a home? Even in Europe and the US, only the 1% ers can afford that.