Uruguay Housing

While getting real data on the economy and home prices is difficult in many parts of the world, especially if you demand accuracy in your numbers, Uruguay can be especially challenging.

Recently, I read a really interesting story from el pais, the country's paper about real estate prices, credit creation, and real estate getting potentially overheated.

Analysts are openly speculating about the existence of a nascent Uruguay housing bubble growing out of the last 7+ years of economic expansion on the back of the argentine and uruguayan financial crisis of 2002.

Uruguay real estate has been screaming higher in regions such as punta del este, the vacation hot spot along Uruguay's coast in Maldonado. A lot of the recent price advances have come about from foreign money pouring into Uruguay in search of a safe haven. As such, the slowdown in credit creation (that which was being analyzed by el pais) hasn't had any affect on property prices yet -- although it has slowed down transactions slightly.

Whether or not the slowdown in transactions will lead to a decline in prices will depend in large part on political considerations in neighboring Argentina -- where cash is extracted and 'hidden' in Uruguay. For that reason, the decline in credit creation hasn't brought prices back down to earth yet.