Paraguay’s Rental Market Faces Challenges Amid Rising Prices and Informality

The rental market in Paraguay exhibits a complex dynamic shaped by the Rental and Leasing Law 1,295. Although the legislation ties price adjustments to year-on-year inflation, which reached 3.8% in December, in practice, the market operates with greater flexibility, especially in the private and informal sectors.

Data from the National Statistics Institute (INE) reveal that approximately 538,000 people, equivalent to 9% of the Paraguayan population, reside in rented properties. This segment is subject to a Value Added Tax (VAT) of 5% for housing and 10% for commercial premises.

In Asunción, the market shows a significant increase in prices. A one-bedroom apartment in new buildings reaches G. 3,800,000 monthly, while two-bedroom units are priced at G. 5,800,000, evidencing an increase compared to June 2023, when values were considerably lower.

The peripheral areas of Asunción are experiencing notable growth in real estate developments of up to four floors, with average rents of G. 1.7 million. The premium sector is concentrated in the corporate axis, particularly along Santa Teresa Avenue, where rents can exceed USD 2,000 per month.

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The government’s Che Róga Pora program, designed to facilitate access to homeownership, faces significant challenges. With only 350 pre-approved homes, the program is limited by the high level of labor informality, which affects 70% of Paraguayan workers, making it difficult to verify the income necessary to access credit.

The Paraguayan real estate market presents a striking contrast: while there is an oversupply of luxury apartments with low demand, developers are redirecting their investments towards more affordable units for the middle class. This trend responds to the country’s economic reality and seeks to balance supply with the population’s purchasing power.

El artículo en español aquí.