Housing policies in Argentina under President Macri (2015–2019): a divided nation perpetuating path dependency

Abstract

This paper focuses on housing policy changes introduced by the administration of President Macri (2015–2019) which claimed to have made a U-turn in Argentinean policies. The study questions whether the housing policy changes introduced constitute a conjuncture with enduring consequences, or if the overall trajectory of the country’s housing events has only been temporarily disrupted by Macri’s administration. The paper contributes to current debates on path dependency studies in housing policies and a recent call for a more political focus in housing studies. It does so by analysing the reactive changes introduced during the conjuncture and their potential to create a new path in a politically divided nation. The results show how a dramatic turn in politics – from the extreme left to the right – can be ineffective in making enduring changes in policy paths. As more and more countries around the globe are facing an increasing polarisation and atomisation of domestic politics, the example of Argentina demonstrates that path dependency easily perpetuates in the housing systems of politically divided nations.

Keywords:

• Housing
• path-dependency
• Argentina
• subsidies
• neoliberalism
• Latin America

Acknowledgments

During the writing of this paper, academics from the Di Tella University in Buenos Aires (Argentina) provided access to data and valuable information on government policy. Additionally, this paper received insightful and very constructive comments during the review process. The authors are grateful to all those involved in the process.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Decree 902/12 http://servicios.infoleg.gob.ar/infolegInternet/anexos/195000-199999/198531/norma.htm

2 See full composition of Argentine Congress at https://www.hcdn.gob.ar/index.html

3 The Centre for Strategic and International Studies lists the most significant reforms planned and executed by Macri. Out of 43 reforms, only 8 where approved, 35 were still in progress or listed as incomplete at the time of his departure from office in December 2019. See http://argentinareforms.csis.org/index.html#start

4 See ANSES newsfeed (2012) http://www.iprofesional.com/notas/139523-Crditos-ProCreAr-el-Banco-Hipotecario-difundi-los-modelos-de-viviendas

5 TECHO https://issuu.com/techoargentina/docs/relevamientos_de_asentamientos_2013 and http://relevamiento.techo.org.ar/downloads/informe_relevamiento_TECHO_2016.pdf For the methodology see file:///C:/Users/kls07cbm/Desktop/ivt_metodologia%20TECHO.pdf

6 The new administration implemented important finance changes: a) an inflation target was introduced; b) the Central Bank’s independence was restored; c) introduction of a tax incentive programme to repatriate Argentineans’ cash deposited abroad (blanqueo). The latter managed to increased central bank reserves by approximately US$ 5,300 million, deepening the capital markets and availability of cash for loans and mortgages (http://www.latercera.com/noticia/argentina-recauda-us-5-300-millones-blanqueo-capitales/). At the housing level, the possibility of taking deposits as well as granting mortgage loans denominated in indexed units (known as UVAs) was allowed. The value of the UVA has been benchmarked following the construction cost of a pre-determined housing typology (known as “model 6” for a single-family unit) which is measured by Argentina’s National Statistics Agency (INDEC). The value is linked to the construction prices for the metropolitan area of Buenos Aires -the ICC index for its Spanish acronym, which is also provided by the INDEC. The UVA benchmark was established on the 31st March 2010 with an initial value of AR$ 14.05, and representing the cost of building a 1/1000th of a square meter of housing. The value is obtained from calculating a simple average for the price of construction for the Autonomous City of Buenos Aires and the cities of Córdoba, Rosario, Salta, Paraná and Santa Fe, therefore contemplating a range of construction prices from the most expensive Buenos Aires to medium cities like Córdoba and less expensive locations such as Salta. In order to adjust the UVA to inflation, Argentina’s Central Bank introduced on 31st March 2016, an inflation coefficient (Coeficiente de Estabilización de Referencia –CER). This new UVA thus provides the real interest rate of accounts as opposed to the previous which was nominal. Argentina’s Central Bank now allows deposits and mortgage loans denominated in UVA. The goal is to encourage savings as well as funding for long term instruments in the context of an inflationary economy. The provision of adjustable mortgage loans is a completely new direction for the country, since indexation to any type of contracts was forbidden by law since 2002 (See Articles 7 and 10 of Law No. 23,928, provided for in article 27 of Decree No. 905/02, ratified by Law No. 25,827, and article 21 of Law No. 27,271). The restriction included any type of real estate development contract, as well as mortgages and rentals. The decree 146/2017 allows now for indexation of real estate mortgages and for urban developments loans, although restrictions still apply to rental contracts.

7 Details of the programme and a brief summary of the changes can be found in https://www.argentina.gob.ar/procrear/quees (in Spanish).

8 Difficulties in keeping-up with mortgage payments have been reported in the local media, with headlines like ‘UVA mortgages: The nightmare of owning a home’ https://www.pagina12.com.ar/226524-creditos-uva-la-pesadilla-de-la-casa-propia

9 https://www.lavanguardia.com/internacional/20171219/433762364494/argetina-reforma-pensiones-protestas.html

10 Available at https://www.argentina.gob.ar/sites/default/files/politicassociales-publicaciones-informe-gasto-social-2018.pdf