With more than $95 per barrel, the real estate market grew up to 173% during 2011 and 2014. In 2022, with prices high again, that market will grow, but not at those levels.
Between 2011 and 2014, with a price average of barrel of petroleum of $95.5, Ecuador experienced an explosion of real estate.
Thus, for example, units sold (both houses What departments) grew more than 173% in Guayaquil during this period. That is to say, it went from selling a little more than 6,000 to exceeding 16,000 a year.
In the case of Quitobefore the second oil boomless than 150 were offered real estate projectsbut in those four years, the average skyrocketed to more than 283.
The State grew and so did the sale of homes
Roberto Rivas, an economist and researcher in the real estate sector, pointed out that the high prices of crude oil generated a temporary shock in the Ecuadorian economy.
“The size of public spending more than doubled and that produced a growing business as a supplier of the Condition. In addition, public employment also increased. So for a few years there was a lot of money and house and apartment sales skyrocketed,” he said.
That bonanza, however, vanished as quickly as it came. As of 2015, with an average price of a barrel of oil of $52, unit sales fell, at first, to 5,266 a year in Guayaquil, until reaching a floor of less than 2,200.
Rivas stressed that everything was a passing mirage. 70% of the activity of the construction sector depends on Conditionso when the public source no longer had as much income, the effect was immediate.
Can the bonanza be repeated?
From January 2022 to date, the price of the barrel of WTI, which is the reference crude for EcuadorIt has been at a little over $86. That envisions a scenario with more state revenue and even more spending.
However, the situation is very different from 2011, when there was a lot of room for expansion of the Condition and there were even savings accumulated from the first years of dollarization.
A new oil boom could increase real estate salesbut not at the same levels as 10 years ago.
For Germán Carvajal, a representative of the Market Watch financial consultancy, the price of crude oil can even rise to $150, but that will not necessarily be good for ordinary Ecuadorians.
In 2011 there was a demand accumulated unsatisfied since the beginning of dollarization. The middle class tripled and there was more of a market for houses and apartments.
The middle class moved the real estate market
Now before the decline of the middle class as a result of the pandemica, there are not so many resources in people’s pockets, and 60% of housing demand is already covered.
In other words, theoretically there is room for business in the remaining 40%, but everything will depend on how much the flagging levels of income are recovered.
In addition, there is also the possibility that the market increases an additional 7% a year with part of the young people, between 25 and 35 years old, entering the labor market.
Carjaval affirmed that at this moment there is an oversupply of houses and Departmentyes Thus, in Quito 9,000 units are available per year, but only about 4,500 are sold.
On the other hand, the offer Guayaquil it is 10,000, but only 5,000 are being marketed
“There is twice as much supply as demand. There is room for growth, but it must be built taking into account the price that Ecuadorian families are looking for, the location, the facilities and extras that can be offered in the real estate projects”, Carvajal pointed out. (JS)
El 78% de los ecuatorianos en la llamada clase media descendentes, con ingresos familiares de hasta $2.000 mensuales, están buscando casas y no departamentos.
En el extremo sur de Quito, el costo promedio de una vivienda es de $35.000; mientras en el extremo norte, el precio está entre $50.000 y $75.000
Purchase of new houses is affected by the second-hand market
Currently, one of the main problems in the real estate sector is that used or second-hand goods are trying to be sold more expensive than new goods.
Thus, for example, in the Unión Nacional sector, north of Quito, land with old houses is being offered for more than $400,000, despite the fact that its real market value does not exceed $250,000.
In other words, it seeks to place at prices higher than what a new home costs in Cumbayá.
The sellers are mostly senior citizens or heirs, and their logic is that if they sell for $400,000, and then buy a new house for $200,000, they will have $200,000 left over to buy cars or other assets and even put in the bank to live on. the interests.
But, Andrea Gómez, a real estate consultant, pointed out that people do not realize that, when they sell houses that are more than 30 to 40 years old, what really has value is the land.
“You can sell up to a certain value, but not to make a huge profit. If second-hand prices moderate, the sale of new homes will increase. People are out of focus and believe that when they want to sell what is theirs, it is the best and most expensive, but when they want to buy, they look for almost nothing,” he concluded.
