In today's real estate market, there are several factors that work against the decision to buy a new home: high mortgage rates, restricted access to credit, and home prices, which have generally remained resilient despite the adverse local economic conditions. 

But are there any attractive opportunities in this context? To answer this question, we need to analyze a few indicators. 

• In the Metropolitan Region, there is currently a situation of oversupply.  According to data as of the end of the second quarter of 2023, supply averaged 66,943 units, an all-time high. Quarterly sales, meanwhile, totaled 7,258 units. This results in a 27.4x-months ratio to sell through inventory.

• Of the available inventory in the apartment segment, there is a high concentration of inventory available for immediate delivery, which accounts for more than 30% of the total supply. As a result, many real estate agencies are offering significant discounts and greater payment flexibility in an effort to clear their accumulated inventory.
  
• Building permits for new homes, on the other hand, have been falling sharply. In Q1 2023, permits in Greater Santiago totaled 2,764 approved units, representing a 71% decrease from the same period the previous year, according to figures from the INE. Given this, as the pace of sales recovers, the excess supply should be resolved in the medium term.

Taking all of this into account, we see an investment opportunity in purchasing new apartments in developments that are ready for immediate occupancy or nearing completion. In other words, buying the property today—taking advantage of the significant discounts currently available in the market—generating rental income, and seeking to sell it in the medium term once supply and demand are more balanced. The latter would go hand in hand with a decrease in long-term interest rates, which are associated with mortgage loans.

Sebastián Mahave

Real Estate Analyst, Fynsa AGF