Pessification of real estate?

[sergio]

The following article talks about the possible pessification of the real estate market, pretty alarming for expats who own property as they may never be able to recover their investments if this happens:
http://www.lanacion.com.ar/1476764-moreno-se-impone-entre-los-consejeros-de-la-presidenta

 

[el_expatriado]

I'm not so sure this is such a bad thing. This would actually make the peso a lot more useful. One of the reasons no one wants pesos is that you can't buy anything of real value with it. There are very few investments that hold their value in pesos. If you could at least use it to buy Argentine real estate it would have some more value because it could be transformed into something that would hold its worth over time.

 

[Davidglen77]

I agree with this. The whole dollar-mania is what makes the peso so difficult to use anywhere. All things sold in Argentina should be sold at fixed prices in Argentine Pesos and not pegged against the dollar. If you live in Argentina, use Argentine money!

 

[el_expatriado]

...pretty alarming for expats who own property as they may never be able to recover their investments if this happens.

Also, expats will always be able to recover their investments. There will always be an informal market for dollars. It just means you may end up paying more to get dollars after you sell your property. But it doesn't mean you will never be able to get your cash out of Argentina.

I also want to remind all of you who are here for the long term that Cristina is not going to be in office forever. At some point in the future we will return to something that resembles normal. The key is not to panic.

 

[TERKILD]

A pesification would not cause any direct loss to property owners, WRONG statement! It would only mean that dollar accounts held, would be peso accounts afterwards! Also the value of properties would be denominated in pesos, (bananas, horses, yen or whatever). Only the dollar accounts would suffer an immidiate loss!!! Totally stupid and wrong statement to post!!!

 

[el_expatriado]

a pesification would not cause any direct loss to property owners, WRONG statement! It would mean that dollar accounts held, would be peso accounts afterwards, and the value of properties would be denominated in pesos, (bananas, horses, yen or whatever). Only the dollar accounts would suffer an immidiate loss!!!

We already have a defacto pesification of property prices because no one can get dollars. People are already asking to pay in pesos and people with dollars are demanding to pay lower prices.

 

[MikeMike]

I agree with this. The whole dollar-mania is what makes the peso so difficult to use anywhere. All things sold in Argentina should be sold at fixed prices in Argentine Pesos and not pegged against the dollar. If you live in Argentina, use Argentine money!

Alternatively, if the economy were properly administered in Argentina, the peso would have value and people would not feel the need to transact business in dollars. The long term solution is not explicit pesification but rather the implementation of a viable economic model. Take a look at Chile for example. Strong, growing economy, and not a dollar in sight (dollars are not used for real estate, etc).

 

[sergio]

Interesting comments but I'd like to ask the writers if they are property owners.
Also did they live in Argentina during the last crisis? Those who had money in banks lost a lot of money as their accounts were frozen after being changed to devalued pesos. '

What about property owners who have decided to leave Argentina? How will they recover their investment and get the money out of the country? The peso could be devalued radically overnight. That would mean that selling in pesos would be highly risky as by the time you bought dollars on the parallel market, at considerable loss, the peso could be a fraction of its value.

By posting this I was not looking for an expat referendum on Cristina. If you are an expat and you think she is doing the right thing by the economy, fine. I am more interested in hearing from expat PROPERTY OWNERS about what they think and what plans they have and what ideas they have to sell and get the money out of Argentina before it is too late.

 

[sergio]

A pesification would not cause any direct loss to property owners, WRONG statement! It would only mean that dollar accounts held, would be peso accounts afterwards! Also the value of properties would be denominated in pesos, (bananas, horses, yen or whatever). Only the dollar accounts would suffer an immidiate loss!!! Totally stupid and wrong statement to post!!!

Unlike euros of £ , pesos have no value outside Argentina. They can not be changed to dollars w/o doing so illegally at great expense. Pesos can be devalued at any time and will be radically devalued eventually. That means that the expat seller WILL lose everything or a huge percentage of his/her investment.

I am not interested in analyzing the rightness or wrongness of Cristina's economic policy here. I'd like to stick to the topic of the possible/likely pessification of property sales and how expats can avoid personal financial disaster. For some people the loss of a home investment means serious life time financial problems. Please have a little empathy and consider this if you do not own and you have not made a financial commitment in Argentine real estate.

 

[PhilinBSAS]

About the same level of sympathy as for those bond holders who speculated in Argentine stock then whinge because they didnt make a profit?

health warning - any investment can go down in value as well as up

Property investment is the largest contributor to the economic and political instability of western nations. I'm currently reading David Harvey's essays - Rebel Cities

Setting aside the concerns about the current macro-economic management or likely mismanagement of the Argentine currency, the pegging of the $A to the $US by a currency board to get some stability in a hyper-inflating economy (by Domingo Carvallo under a Radical not a Peronist President) was in retrospect only ever a short term option that stayed on well beyond it's "sell-by" date and then predictably came back to haunt with a vengeance!

Carvallo went from hero to zero = and never got that Nobel prize for economics

Argentine recent economic history - at a glance! http://www.economist.com/media/globalexecutive/and_the_money_kept_rolling_in_e.pdf

Fact is many foreigners who bought Argentine property in the "knock down" years immediately after the corralito got a huge bargain at the time.

I'm sorry for anyone who is in danger of loosing their home N.B there is a lot of that about not just in Argentina