Amazing how expensive BsArs is

[nicoenarg]

Also, I think that we are mostly talking about CapFed, not the rest of Argentina.

 

[trennod]

That's food or a week? You have no protein in there and that's the expensive part!

I think we all agree that food in the supermarkets here has become more expensive than in most of Europe and the states. And that local salaries vs. local expenses is an ugly ratio. I don't know how the average Argentine affords to eat.

But it doesn't mean life on the whole is expensive here for expats. This board chases people away. Yet, if like many they can earn foreign currency while living here, BA remains a relative bargain for a major city. Rent alone is so much cheaper, whether you're looking for a small starter apartment or luxury, that the overall cost of life here compares favorably to life in major cities around the world. And with the peso headed due south on the parallel market given CFKs increasingly crazy acts, it will only get better for those with income from abroad.

If you're going to earn pesos, stay home!

I agree with you that BA is a bargain when you are earning euros, USD, AUD or any first world foreign currency. But couldnt that be said for any world city where your foreign currency is stronger? Also agree with your last line to an extent, albeit devaluation is not a good thing for the long term health of the economy and this country. It needs to fix inflation not devalue the peso and continue along its merry way with 30% per annum and doctoring its offical figures.

 

[jb5]

I think a devaluation is necessary. Brazil and Chile, big trading partners, are devaluing their currencies o that their exports remain competitive and foreigh investment keeps coming. With an unrealistic currency value, Argentina is continuing to become an island cut off from the global economy.

 

[steveinbsas]

Either all of you are making very exotic purchasing decisions, or something has changed radically in the last six months. I visited in November 2011 from Atlanta, which is by no means an expensive city by US standards (and has experienced considerable asset deflation as a result of the overall macroeconomic situation).

In any case, the situation did not seem worse than in any other Latin American capital I have been to, and in many respects, was a lot better. I think a lot of you who live in Palermo or Recoleta may be getting gouged on daily errands because of where you are. I stayed in San Telmo and had no sticker shock.

Otherwise, could it be that you lot are expecting BsAs to be so dramatically, magnitudinally cheaper than your home countries that you get angry and bitter when it falls short of your precise, desired ratio? Perhaps you came a few years after the corralito and have developed a bit of a sclerotic entitlement syndrome with regard to the prices you found when you first got there? I hear you loud and clear about inflation, economic mismanagement, crime, corruption, and import restrictions--the latter are most infuriating to me. However, if I didn't know better from personal experience, I would say the narrative being constructed here paints BsAs as a place with Tokyo prices and Kinshasa quality. Come on now.

I arrived in BA six years ago today, more than four years after the corralito. Most items in the grocery store were signficantly cheaper then. Taxis were a fourth of today's cost. Roast beef was less than $8 pesos per kilo. Now it's over 40. ABL taxes were less than 25% of what they are today. Just two years ago a 250 g bag of peanuts (no shells or skin) was less than 3 pesos at Carrefour in Belgrano. Today the same size bag (same brand) is 7 pesos at Walmart in Bahia Blanca. Three years ago a kilo of whole bean Virginia brand coffee was 28 pesos per kilo at Carrefour and a 250 g bag of Bonafide ground coffee (with 10% sugar) was less than 6 pesos in the Chinos. Today a 125 g of the same Bonafide coffee is over 9 pesos. Beer has gone from 3-4 pesos per liter to 9-13 pesos and a package of six alfajors from 3-4 to $12 to $14. Many other items have doubled or trippled in price in the past three years, including canned tuna and better brands of canned fruit. I remember seeing an 800 g can of Canale fruit coctel for 7 pesos in Cotto when I wasliving in BA. Yesterday I saw it for over $20 at Walmart. Two years ago a four liter jug of Castrol motor oil (for high milage cars) was $125. Yesterday at Walmart it was $198. At least it hasn't doubled.

BA has not experienced significant "asset depreciation" if you are talking about real estate, but there never was a bubble created by the extension of credit to those who coud not repay their loans like there was in the USA. In 2006 I found a completely recycled one bedroom apartment in an older but not luxurious building in Recoleta for sale for $1575 per meter. The exact same size apartment one floor below in poor condition was just over $1000 per meter. Today those apartments would probably sell for at least 50% more, but I seriously doubt they have doubled in value.

For both of those apartments the expenses have increased from $450 per month in late 2006 to close to $1500 per month now. The ABL was $200 pesos in 2006, jumped to $600 in 2008, and are surely over $1000 now. It's impossible to stop or even slow the increase in expenses and that probably has a negative effect on the increase in the resale price.

BA is still a lot cheaper than Paris or Tokyo as far as real estate prices are concerned but the pay scale in BA is significantly lower and the quility of food, clothes, and service is significantly lower as well. I could not afford to live in BA today. Yes, I pay more for gas where I am now than I did in CF (because it is delivered by truck), but not having to pay the consorcio fees also "saves" me enough to pay for my gas, electricity and all my insurance (house, car, and medical), as well as my property taxes which increased from less than $50 pesos (yes, fifty) in 2009 to about $700 in 2012. The house is four times bigger than my apartment in Recoleta and there is also a galpon (outbuilding) that is twice the size of my BA apartment...all sitting on 11,664 meters of land which is surrounded by tamarisco trees. I am presently subdividing the property into four lots (two of 2484 meters and two of 2916 meters) to create a mini-barrio privado.

The same day I found my present home on line I found a property in France that is surprisingly similar. It only has 1800 meters of land and is seven times further from the coast than my house....and three times the current price of my house (with 2900 meters of land):

http://www.frenchentree.com/french-...vres-79/propertydetails.aspx?PropertyID=69407

Of course it is a lot closer to Paris, but I could not afford to buy it and live there. Immigating to France would not have been possible unless I married my high school girlfriend who has lived there for decades and become an arrogant European (we reunited for an unpleasant evening in Paris in 2004). Immigrating in Argentina was not at all difficult in 2006 and I was granted permanent residency in 2009. Because the foreign income requirement trippled in 2010 I would not "qualify" for temporary residency today.

You can see my house in the attached photo.

If you click on my "signature" below you will find the one thing in Argentina that is still much cheaper than the rest of the world: art by recognized artists...and I have the lowest prices on the site for works by the same artists. I bought my collection at very good prices in 2006 and 2007 and I'm not treating my ML sales as a business with any desire to buy more art to sell in the future or export to the US. The walls of my house are full and I'm now selling off the excess.

 

[trennod]

I think a devaluation is necessary. Brazil and Chile, big trading partners, are devaluing their currencies o that their exports remain competitive and foreigh investment keeps coming. With an unrealistic currency value, Argentina is continuing to become an island cut off from the global economy.

Sorry jb5, I should have been clearer. I do agree with you that a devaluation is now necessary given where we are at with the official peso rate.

The point I was trying to make is that devaluation should not consistently required - fiscal policies that promote business and competitiveness here in Argentina (reduction in export taxes and red tape) and some that try to address inflation would be better served in my opinion in the long run. I also dont agree with the constant interception and using dollar reserves to propr up the peso and delay the inevitable.

 

[nicoenarg]

They said, if they go all out crazy on grocery shopping then they spend about 30 pounds a month. Which calculates to roughly 120 pounds for the both of them per month (they said 100 a month on average but I took higher figures into account). Today's exchange rate puts that at about 858 pesos.

Woops, I just noticed what I did there. I meant to say 30 pounds a week which translates to about 120 pounds a month. hehe.

 

[AlexanderB]

I was speaking strictly and exclusively about the affordability of Buenos Aires for those earning foreign income denominated in foreign currencies. I agree that the local wages are unconscienably miserable and don't see how most locals afford to live in CapFed at all.

 

[nicoenarg]

Yeah, that's why I kind of gave the example of Scotland, which is cheaper (in terms of groceries) AND you earn "foreign" income. denominated in "foreign currencies".

But you do have a valid point that BsAs is cheaper in other things. For example, my last electric bill was 20 pesos (with subsidies)...that's for 2 months. So 10 pesos a month. Pretty darn amazing. Sadly it won't last forever. In fact, these bills are slated to not only have no subsidies but also go up, what, 200% or was it 300%?

Things do change here very fast. What you know from November 2011 only has place in history books now.

 

[ElQueso]

...For example, my last electric bill was 20 pesos (with subsidies)...that's for 2 months. So 10 pesos a month. Pretty darn amazing. Sadly it won't last forever. In fact, these bills are slated to not only have no subsidies but also go up, what, 200% or was it 300%?

I'd like your bill at a 1000% increase! My last bill was 870 pesos. Up from 400 before I lost the subsidy. It's now comparable for what I would have paid in Houston for the same square footage, at least out where I used to live.

Insurance is still cheaper though...

 

[AlexanderB]

But then again, I know lots of New Yorkers and Londoners, too. Knowing what they get paid--average professional salaries that in most other markets in their countries would be considered neither high nor low, but affording a comfortable middle class standard of living--I cannot see how they can afford to live there, either.

Many of them share the same struggles as porteños, live with their parents well into their thirties at least, etc. All of them complain constantly about how expensive everyday life is, though all of them find niche ways to economise that are totally invisible to tourists and even long-term resident non-natives. None of them are thrilled. The number one complaint is the expense of housing.

In other words, all large world capitals are expensive relative to median local wages. I don't think BsAs invented the crowded and relatively expensive capital. The only thing that might be different in other places is that it might be easier, or at least more feasible, to live very remotely and commute in. Yes, I know BsAs has commuter trains, but I would wager that the average Jersian has a easier access to jobs in Manhattan.

That said, I agree that the magnitude of the disparity is much worse in BsAs. Many porteños I've met make under AR$1000 monthly. How the hell are you supposed to live on that? Makes Barbara Ehrenreich's "Nickel and Dimed" struggles look like a cakewalk, and Argentina has never been or regarded itself as a Third World economy.