Housing market recovers in the Southern Cone

The housing market in the Southern Cone countries of Chile and Argentina is starting to pick up as economic recovery take roots in both economies. Chile’s housing market is likely to recover faster, owing to Argentina’s lower rate of economic recovery as well as reconstruction efforts starting up in Chile following the February 2010 earthquake.

  • Both countries have experienced house price slowdowns in 2009, with local analysts reporting a 26.0% fall in property prices in Buenos Aires in January-October 2009 over the same period of the previous year;
  • In Chile, where house prices are not officially tracked, local estate agents reported annual declines in property transactions of as much as 30.0% in the first half of 2009. The average price per square metre of property in an urban centre was measured at US$1,486 in Chile and at US$1,994 in Argentina in 2009;
Urban property prices in selected Latin American economies: 2009
US$ per square metre

Source: Global property guide.

  • Both property markets have suffered from economic slowdowns, with Chile’s economy contracting by 1.8% annually in 2009 and Argentina experiencing minimal annual growth of 0.7% in the same year.


Chile’s property market is set to recover at a faster rate than that of Argentina:

  • Despite Chile’s economy entering recession in 2009, it is well positioned for recovery in 2010 with a well diversified export base. Although copper is the country’s primary export, the developed nature of other sectors such as light manufacturing and agriculture mean that it is not over-dependent on copper;
  • By contrast, Argentina is experiencing ongoing economic troubles. In early 2010, the government was forced to transfer funds from the central bank in order to service public debt. Meanwhile, industrial unrest is frequent, exacerbated by electricity shortages;
  • Argentina’s unemployment rate has risen to 8.9% in 2009 from 7.9% in 2008. Chile’s unemployment rate actually fell to 7.1% in 2009 from 7.5% in 2008. Workers in Chile are therefore better placed to buy properties once confidence in the market begins to recover;
  • Argentina’s spending on housing and community amenities has been consistently higher than Chile’s, totalling 3.7% of total government expenditure in 2009, compared to 1.8% in Chile. However, Chile is increasing its spending on housing sharply in 2010, largely as a result of the February 2010 earthquake that devastated the south of the country. Argentina, on the other hand, will unlikely improve government expenditure on housing given the country’s fiscal troubles;
Expenditure on housing and community amenities as % of government expenditure in Chile and Argentina: 2004-2009
% of government expenditure
Source: Euromonitor International from International Monetary Fund (IMF) and national statistics.
  • With total reconstruction costs in Chile estimated to reach US$30 billion, with a substantial proportion of this allocated to private housing and public building, Chile’s property market will experience a construction boom and rising demand for temporary or rented accommodation during 2010;
  • The revival of the housing market in both countries in 2010 will have positive implications for the banking sector, which has performed sluggishly during the economic downturn. Although the mortgage market is relatively small (households with mortgages totalled only 2.3% of households in Argentina and 23.7% in Chile in 2009) it is increasing, particularly in Chile;
  • There may also be renewed foreign interest in the Southern Cone’s property market in 2010, with Argentina’s beach areas likely to receive most interest. However, potential foreign owners are likely to wait until new housing market trends have become well established, meaning that they will lag behind the domestic revival.


Property markets in both countries will revive in 2010 as the economic recovery takes root, but the recovery will be slower in Argentina:

  • Argentina’s economy is forecast to grow by 4.0% annually in 2010 and Chile’s by 4.5% annually, with annual real GDP growth of 2.5% and 4.5% respectively in 2011;
  • Chile’s property market is already showing signs of recovery, with estate agents reporting in November 2009 that property prices had risen by up to 20.0% in Santiago and by 48.0% compared to a year earlier in the wealthy coastal city of Valparaiso;
  • Property prices in Chile will receive an extra fillip from government rehousing and rental subsidies following the earthquake, as well as high demand for temporary housing.