Mexico Residential Real Estate Statistics
The Residential Real Estate market in Mexico is poised for significant growth, with projections indicating it will reach a value of $3.68 trillion by 2024. Subsequently, the market is expected to exhibit a compound annual growth rate (CAGR) of 4.81% from 2024 to 2028. This steady increase is set to elevate the market volume to $4.44 trillion by 2028. As of 2022, the total supply housing units in Mexico stands at approximately 37 million.
Types of Housing
In Mexico, the housing market is primarily dominated by homeowners. In 2022, about two thirds of all Mexican homes were owner-occupied. Meanwhile, 15 percent of the total 37 million housing units were rented. Single-family houses dominated across all states, while Mexico City had the highest share of multifamily buildings, totalling 1.1 million out of 2.9 million housing units.
*Multifamily: house with more than 2 units (includes apartments, units in multi-family buildings)
Demand for housing continues to grow, reflected in the rising average price of single-family units. In the third quarter of 2023, the average house price experienced a more than 10 percent annual increase, which adjusted for inflation amounted to approximately 5.5 percent. Mexicans typically spend 1.6 million Mexican pesos on residential property. In Mexico City, residential property is the priciest, averaging nearly 3.7 million Mexican pesos—almost double the national average.
The value of residential real estate transactions in Mexico surged by over $12 billion between 2017 and 2023 and is projected to continue rising through 2028. In 2023, home sales in Mexico reached $25.73 billion and are projected to reach $37.86 billion by 2028. This positions Mexico among the top 20 countries globally in terms of residential real estate transaction value.
Housing Supply & Regional Variations
Despite robust demand, the supply for housing in Mexico remains inadequate. The number of housing units constructed in Mexico has significantly declined over the years. In 2015, housing completions peaked at approximately 301,820 units. However, only 131,050 dwellings were built in 2023.
The pandemic worsened this decline, leading to a 15.9% decrease in residential sector investments in 2020. Additionally, in 2022, annual investment growth in Mexican residential construction decreased by 3.1% compared to the previous year, signalling a slowdown in new housing development despite persistent demand pressures.
Opportunities & Challenges
Opportunities
In Mexico, residential construction is largely unregulated. Most new homes, about 6 out of 10, are self-built by owners rather than developers. This informal construction often lacks adherence to building codes. Looking forward, a substantial portion of Mexico’s housing inventory, approximately 57%, built by homeowners, will require replacement as it does not meet current building standards.
Additionally, urban housing in Mexico needs to become denser to accommodate growing population needs. This means increasing the number of multi-level or multi-family apartment buildings to replace low-storey buildings.
Challenges
Access to affordable housing remains challenging in Mexico as many low- and middle- income households cannot afford purchasing a house because of high prices and limited access to credit.
The number of new mortgage loans granted in Mexico has decreased over the past decade. In 2023, around 455,300 mortgage loans were issued, a significant drop from the 663,000 loans granted at the market peak in 2008.
Conclusion
In conclusion, the residential real estate market faces significant hurdles, particularly in access to affordable housing and credit. The decrease in mortgage loans over the past decade highlights the financial constraints faced by many potential homeowners. Addressing these challenges requires coordinated efforts from policymakers, developers, and financial institutions to create sustainable solutions that can support both market growth and the housing needs of Mexico’s population.
Sources:
[1] https://www.statista.com/study/78637/residential-real-estate-in-mexico
