When Cristian and Patsy’s rent was raised by 12%, they decided to move from their house in the south of Mexico City to a house near the Periférico.
“We were, let’s say, just barely able to pay and then they raise the rent by a thousand pesos, so it’s like ‘now we’re not going to be able to do it anymore’. We could, but we couldn’t buy a car or maybe a house. I mean, we’d just live off the rent and that’s it,” said the husband of the thirty-something couple in an interview.
Like them, most of the inhabitants of Mexico City, especially the young, struggle to find a place to live.
According to the Federal Mortgage Society (SHF), the capital of the country has the highest housing price per square meter in the country, and is 82.57% above the national average price for average residential housing.
This means, for example, that an apartment of about 60 square meters that is sold for around 2.5 million pesos in the capital of the country, in entities such as the State of Mexico or Quintana Roo, where the price per square meter is between 24 and 28 thousand pesos, its price would be 1.6 million pesos.
Now, if we take as a reference the average salary of workers in Mexico City, of 8 thousand 233 pesos for women and 10 thousand 515 pesos for men, according to data from Coneval, a person would have to save their entire salary for at least 20 years to pay that amount. Therefore, to buy a home, it is almost inevitable to require some type of financing, although it is not always accessible, as we will explain later.
The demand for housing in Mexico City, especially in the central municipalities or those close to work centers, most of them in Miguel Hidalgo, Cuauhtémoc and Álvaro Obregón, was further pressured by the arrival of foreign residents who, with the pandemic, were able to work remotely and began to temporarily rent housing spaces in those areas.
Since then, the Mexico City Government has tried to promote actions to contain the rise in rents and make the price of housing more affordable. Although with little success, specialists consulted by El Sabueso agree.
The latest attempt in this regard is the initiative presented by the head of Government, Martí Batres, which seeks to reduce the limit for the increase in rent prices; however, as we explain in this note, if it is approved, its scope will be limited to contract renewals.
The challenge of containing the rise in rents
One of the reasons why it is difficult to contain the rise in housing rent prices is the lack of control and surveillance over that market.
Although the Civil Code of the Federal District regulates the excessive rise in rent, there are no official administrative records of rent prices, so it is not clear how much it really costs to rent in Mexico City. Instead, all the data, when there is any, comes from real estate company platforms.
“A big problem is that we do not have enough information on how rental prices are really accelerating,” explained Máximo Jaramillo, researcher at the Institute for Studies on Inequality (Indesig).
“We have the surveys, but they are not administrative records. And some data from the SAT on rental contracts that pay taxes, but we know that most of them are verbal, not written, and from there a very low percentage actually reports to the treasury,” he added.
For example, the average rent for an apartment in Mexico City ranges between 15 and 18 thousand pesos, according to real estate platforms such as Inmuebles24 and Properstar. That is to say, to rent a space, the average salary in Mexico City identified by Coneval would have to be used almost entirely, between 8 and 10 thousand pesos, for 2 people, or between 70 and 90% of the average income of a professional, which is around 20 thousand pesos.
While real estate agencies recommend that housing expenses not exceed 30% of household income, Mexico City prices make it unviable to maintain that margin.
For urban planner Rosalba González Loyde, the goal should be to make housing affordable. That is to say, that people can pay rent or a mortgage without sacrificing many other expenses.
“In the Doctores neighborhood, I think the monthly rent for a 50 to 60 square meter home is between 13 and 14 thousand pesos. So clearly the unaffordability is growing. This can lead to expulsion mechanisms in the event that this production takes place on existing land,” he said.
Although the CDMX government has tried to contain the rise in housing rental prices, driven mainly by high demand in central areas and real estate speculation, in the last year the rental price rose 28.39% between June 2023 and last June, according to Properstar.
Even the CDMX government estimated that rents in the country’s capital grew 6 times more than the general minimum wage between 2012 and 2018.
And while it is possible to find lower prices, transportation costs, food and other expenses related to traveling far from home to work, study or other daily activities end up affecting that issue.
Cristian used to live in the east of the city, in Iztapalapa, for a rent of 4 thousand pesos per month, almost a quarter of what it costs to live in more central municipalities. But the cost of gasoline ended up impacting his finances. Reason why she decided to move to the other side of the city.
Buying is complicated by lack of access to credit
According to the National Housing Survey of Inegi, in 2020, 46% of people who rented housing in Mexico City did so because they did not have access to credit or resources to have a house through other means.
Although at the national level, Infonavit provides 67% of the financing for the purchase of new and used housing in the country, in Mexico City the reality is different. 45.5% of buyers turn to private banks to acquire housing in the entity.
In addition, this financing is available only to formal workers, that is, those registered with the IMSS, which excludes 30.7% of employed people in Mexico City, according to Inegi data for the first quarter of 2024.
High income is required to access a bank loan. For example, to buy a 2 million pesos apartment like this, around 600 thousand pesos are required for a down payment and other procedures such as the deed, and proof of income of between 30 and 60 thousand pesos per month, according to the Condusef mortgage loan simulator.
“In this area of Doctores you will no longer find homes for less than 2 million pesos. And that implies the payment of a mortgage of approximately 20 thousand pesos, which requires the household to have at least 60 thousand pesos of monthly income to be able to support it, plus the initial expense,” Loyde explained.
Only 3 out of 10 households in Mexico City have an income of at least 30 thousand pesos per month, according to the latest National Household Income and Expenditure Survey of 2022.
There is no social housing construction policy
Social housing is the type of house with the lowest commercial price in Mexico City, with an average price of 23,345 pesos per square meter. However, in the capital there has been little promotion of its production due to the low profitability it represents for developers.
Therefore, the housing supply remains in the residential middle or higher categories, whose prices are almost double that of social housing. This leaves out people with lower incomes.
“Infonavit clearly recognizes that they have built very little and that the price of housing is well above salaries. And that those who have less than three minimum wages have been practically forgotten by housing policies,” said Silvia Emanuelli, director of the International Coalition for Habitat in Latin America (HIC-AL).
Hence, she continued, in many cases people with lower incomes resort to self-construction on land or expansion of homes to get a home.
For this reason, he stressed that initiatives such as the pilot rental project for young people with incomes of up to 15 thousand pesos (almost two minimum wages) or the proposal of President López Obrador, pending discussion, to develop housing that Infonavit rents to workers at no more than 30% of their salary, may be favorable.
“These approaches seek to offer housing that is not market-based, we are talking about important efforts. Because the more control we have, the more experiences or projects that lower prices, the more we will achieve that the price in general adapts and the market price also adapts. We could force it down a little,” Emanuelli considered.
Even so, with the current scenario, Cristian confided, from his perspective the most viable thing is to try to acquire a property outside of CDMX, such as in Morelos, Querétaro or the State of Mexico.
“What we had thought is to go live abroad in the future, whether it be Querétaro, Aguascalientes or Cuernavaca. We had already thought about living abroad, but things are getting rushed right now. But because of all the money, the rent, I mean, it’s not enough anymore, so it’s like, ‘let’s do it quickly to have some assets,'” he said.
Source: animalpolitico
