How Milei has tripled the number of apartments on offer for rent on the real estate market

Elected on November 19, Argentine President Javier Milei promised his voters twelve months of suffering before restarting the country. Five months were enough to see the first effects, some negative, some positive. The horse cure, even if not complete, has had important repercussions that the Argentines will judge, but on real estate there has been a revolution.

According to the Argentine Real Estate Chamber, the number of apartments available for rent in Buenos Aires has increased 174 percent from the low point last December, from 6,700 available apartments to more than 19,000, and is now at the same level as January 2020. A miracle, but how did it happen?

It must be said that the country had a long way to go: the 2020 rent law extended the duration of rental contracts from two to three years and set rents based on an index, established by the central bank, which took into account the inflation and rents. Together with the obligation to pay rent in pesos, a currency in which Argentines have long lost confidence and which they prefer to the dollar, this law contributed to the collapse of the stock of rental housing: in the month following its adoption, the housing supply had decreased by 20%, due to the over-regulation of the sector.

As a convinced liberal, Javier Milei took the exact opposite path, starting the day after his election. The mega-"decree of necessity and urgency" adopted on December 21st provided for the total deregulation of the real estate market, leaving owners and tenants free to decide the terms of their rental contract. This choice earned the Argentine President the sarcasm of his opponents, who explained that people can now pay the rent "in kilos of beef or liters of milk". However, according to the Argentine Real Estate Chamber, the method worked: after a chaotic start, prices have stabilized and are now rising at a slower pace than inflation.

So to be able to bring the apartments onto the market it was sufficient to deregulate the sector, making rent convenient even under conditions other than the standard ones. The increased supply, after some confusion, self-calmed the sector. After all, there were houses, there was simply a fear of renting them because the owner was not protected. once this protection was guaranteed, the offer returned.

They will understand it in Italy, where the Bank of Italy instead indicates the opposite path (but we'll talk about that separately).

The article How Milei tripled the number of apartments on offer for rent on the real estate market comes from Economic Scenarios .

This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/come-milei-ha-triplicato-il-numero-di-appartamenti-in-offerta-per-laffitto-sul-mercato-immobiliare/ on Sat, 27 Apr 2024 10:00:46 +0000.