Trend: house prices rose by 2.92% y-o-y in 2018

Mexico’s housing market continues to strengthen with the nationwide house price index rising by 2.92% during 2018, an improvement from last year’s meagre growth of 0.73%. Though on a quarterly basis, house prices dropped 1.1% during the latest quarter.

For a decade the housing market has hardly moved. In 2009, house prices rose 0.77% (inflation-adjusted), in 2010 it fell 0.59%, in 2011 + 2.37%, in 2012 -1.15%, in 2013 + 0.39%, in 2014 + 0.84%, in 2015 + 4.36%, in 2016 + 4.07%, and in 2017 +0.73%, all inflation-adjusted.  

Analysis: Luxury market buoyed by both foreign and domestic demand. Mexico’s real estate market has been buoyed by strong demand in resort communities, according to the International Consortium of Real Estate Associations (ICREA). American and Canadian buyers are returning to Mexico, after a several-year slump, thanks to low oil prices and the strong US dollar, pushing home values up. 

Mexico’s rising middle class continues to boost the housing market. The country’s middle class was estimated to account for almost half of the total households, at 14.6 million. They are expected to continue growing, with about 3.8 million more households projected to move into the middle class by 2030.

Rents, rental yields: moderate yields at between 4.9% to 5.4%

Mexico City apartment costs are reasonable at around $3,000 per sq. m. 

Mexico: city centre apartment, buying price, monthly rent (120 sq. m)
	Buying price	Rate per month	Yield
Mexico City	$ 350,000	$ 1,500	5.2%

Recent news. The central bank Banco de Mexico (Banxico) held its key rate unchanged at a 10-year high of 8.25% in February 2019 – after 15 rate hikes since December 2015, after the peso strengthened and inflation slowed.

The Mexican economy grew by a modest 2% in 2018, based on preliminary figures released by the National Institute of Statistics and Geography (INEGI), from expansions of 2% in 2017, 2.9% in 2016, 3.3% in 2015 and 2.8% in 2014.