LuckyLuke
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- May 17, 2024
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Howdy folks,
I've been crunching some rent numbers and wanted to run them by you fancy lot to see if any of you see some holes in my math regarding rent adjustments.
My wife & I rented a house in Neuquen starting at $500,000 on 9/1/23 with adjustments per the ICL every 6 months.
The first adjustment looked something like this:
The dollar during this time had only appreciated 40% and the adjustment was 74%. The resulting net 34% loss of the value of the dollar was reflected as a higher cost of rent in dollars.
Seeing as the highest IPC inflation was during December - March, I assumed that the 74% adjustment reflected the worst of the "devaluation" Melei had enacted after being elected.
Fast forward to today and I began to do some math for the upcoming 9/1/24 rent adjustment. I was not at all prepared for the new ICL numbers. It's a shocking 249%!!
Moreover the government has recently committed to intervening in forex markets to preserving a brecha of 35% - 45 % above the oficial. Seeing as that brecha is already there, this would basically keep the dollar moving the same as the 2% oficial crawling peg.
This makes the next rent adjustment look something like this:
Now assuming that the government economic plan is working fantastically and the ICL index (IPC + RIPTE) begins to magically decelerate at the same rate that it has been accelerating and that the government has maintained it's dolar blue brecha at the oficial crawling peg of 2% it still begins to paint some horrifying numbers:
I'm very curious, what do you all think about these numbers? Will the ICL decelerate as rapidly as it accelerated? Does the government have sufficient artillery to suppress the brecha now that it has plugged it's fiscal holes? If so, are we seeing an iceberg ahead for any expats renting?
I've been crunching some rent numbers and wanted to run them by you fancy lot to see if any of you see some holes in my math regarding rent adjustments.
My wife & I rented a house in Neuquen starting at $500,000 on 9/1/23 with adjustments per the ICL every 6 months.
The first adjustment looked something like this:
Rent | ICL | Adjustment % | Blue rate | Dollar Rent | |
9/1/2023 | $ 500,000 | - | - | $ 735 | $ 680 |
3/1/2024 | $ 870,000 | 147% | 74% | $ 1,030 | $ 845 |
The dollar during this time had only appreciated 40% and the adjustment was 74%. The resulting net 34% loss of the value of the dollar was reflected as a higher cost of rent in dollars.
Seeing as the highest IPC inflation was during December - March, I assumed that the 74% adjustment reflected the worst of the "devaluation" Melei had enacted after being elected.
Fast forward to today and I began to do some math for the upcoming 9/1/24 rent adjustment. I was not at all prepared for the new ICL numbers. It's a shocking 249%!!
Moreover the government has recently committed to intervening in forex markets to preserving a brecha of 35% - 45 % above the oficial. Seeing as that brecha is already there, this would basically keep the dollar moving the same as the 2% oficial crawling peg.
This makes the next rent adjustment look something like this:
Rent | ICL | Adjustment % | Blue rate | Dollar Rent | |
9/1/2023 | $ 500,000 | - | - | $ 735 | $ 680 |
3/1/2024 | $ 870,000 | 147% | 74% | $ 1,030 | $ 845 |
9/1/2024 | $ 1,953,150 | 249% | 125% | $ 1,440 | $ 1,356 |
Now assuming that the government economic plan is working fantastically and the ICL index (IPC + RIPTE) begins to magically decelerate at the same rate that it has been accelerating and that the government has maintained it's dolar blue brecha at the oficial crawling peg of 2% it still begins to paint some horrifying numbers:
Rent | ICL | Adjustment % | Blue rate | Dollar Rent | |
9/1/2023 | $ 500,000 | - | - | $ 735 | $ 680 |
3/1/2024 | $ 870,000 | 147% | 74% | $ 1,030 | $ 845 |
9/1/2024 | $ 1,953,150 | 249% | 125% | $ 1,440 | $ 1,356 |
3/1/2025 | $ 3,886,769 | 198% | 99% | $ 1,613 | $ 2,410 |
9/1/2025 | $ 6,743,543 | 147% | 74% | $ 1,806 | $ 3,733 |
I'm very curious, what do you all think about these numbers? Will the ICL decelerate as rapidly as it accelerated? Does the government have sufficient artillery to suppress the brecha now that it has plugged it's fiscal holes? If so, are we seeing an iceberg ahead for any expats renting?