Gustavo Martínez has a stable job as an engineer at an oil company in Caracas, but he can only dream of buying an apartment because Venezuela’s inflation, the highest in the world, has crippled real estate financing.
By Digital Journal – Javier Tovar
Sep 10, 2021
With banks not offering loans, would-be homeowners are expected to pay for property in a single or handful of installments, using wire transfers, checks and even briefcases full of US dollars.
The national currency, the bolivar, has lost 73 percent of its value to the dollar so far this year, and a single US dollar now costs 4 million bolivars.
The greenback, though not official currency, is widely used to pay for goods and services across Venezuela and it is the only accepted means of payment in real estate transactions.
But in a country with a minimum public service wage of just $2 per month, Venezuelans often cannot afford even to rent and many young adults, including couples, end up living with their parents much longer than they had planned.
Venezuela’s eye-watering inflation, hovering around 3,000 percent, means that banks are loath to risk giving out loans in bolivars. In the rare event they do, the repayment period is generally under six months.
There are no credit cards either.
And in January, the government said banks could give out loans in dollars only with the permission of the Central Bank, making it a near-impossibility.
– ‘No job pays you that’ –
As a result, Venezuelan banks have given out only $140 million in loans to a population of some 30 million, compared to $14 billion in loans in neighboring Colombia, which has some 50 million people.
Of the total loan amount, only $840,000 or 0.6 percent, were mortgage loans, based on official figures released in March.
Economist Cesar Aristimuno told AFP this was a sharp drop from 7.2 percent in 2014, before a global crash in oil prices tanked Venezuela’s economy, heavily dependent on crude exports.
Martínez, the oil company engineer in Caracas, is luckier than most.
After moving to the capital in January, he lived with his grandmother for a while but is now renting an apartment with his girlfriend.
Martínez, 30, did not want to reveal how much he earns, but he said it is more than the average Venezuelan salary of $50 a month. Apartment rents in a modest suburb of the capital start from $150, according to realtor Carolina Quintero.
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Read More: Digital Journal – Cash is king in Venezuela property market as loans elude would-be buyers
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