18 | JUL | 2019
Housing prices double in Mexico City
The average housing price is now of 4 million pesos, according to Softec - Photo: EL UNIVERSAL

Housing prices double in Mexico City

22/05/2018
18:44
Sara Cantera
Mexico City
-A +A
Restrictive policies in construction are one of the causes, Softec warns

Ten years ago, at present value, the average housing price in Mexico City (CDMX) was nearly a million and a half pesos, whereas today, that price has more than doubled. The average housing price is now of 4 million pesos, according to real estate consultant company Softec.

In contrast, in cities like Monterrey and Guadalajara, prices have remained stable. A decade ago, in Monterrey, the average housing price was of MXN$700,000, and to this day, the price has remained the same.

Meanwhile, in Guadalajara, the average housing price was of MXN$900,000 and has also remained the same ten years later.

The latter is due to the fact that these two other cities don’t have restrictive construction policies, said Eugene Towle, managing partner of Softec.

Towle explained that the housing industry is producing less than 15 thousand homes per year, facing an overwhelmingly larger demand of 65 thousand homes per year in Mexico City

“Current regulations in Mexico City make it nearly impossible to build houses of less than a million and a half pesos,” he claimed.

“What is most surprising is that we’ve already had some very effective experiences to solve the problem, but they have not been given a proper follow-up.”

Between 1995 and 1996, on the colony of Nápoles, the architect Fernando Torroella, as head of the Land Use and Territorial Reserve Administration, convinced several neighbors to take part in a program where, if two or three buildings were joined, an increase in housing density was permitted, which enabled them to build more apartment floors in the same space.

Their aim was to generate larger polygons so that infrastructure would become more efficient. Thus, the colony of Nápoles went from being an area of detached houses to a multi-family building zone with an acceptable density.

Towle commented that none of the candidates for the governorship of Mexico City have spoken about the increase in housing costs, nor do they have a plan to stop it.

“There are many candidates that want to deal with the effects of the housing price increase without tackling the root of the problem. They speak of security, housing, decent wages, road management, sustainability, anti-corruption, and the expulsion of residents towards the periphery of the city,” he said.

In order to redensify Mexico City, more construction permits for buildings of over two floors have to be issued. For as long as there is an increase in demand while supply is low, prices will keep going up.

According to the Federal Mortgage Society (SHF), housing prices with mortgages showed an increase of 8.68% in the first quarter of 2018, related to the same period of the year before.

The national average price on the first quarter of the present year was of 810,000 pesos, whereas the median price was of around 535,000 pesos, which means that 50% of operations in the housing market occurred at a price range that is below average, and the other half above.

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