SciELO - Scientific Electronic Library Online

 número102¿Estamos ante una burbuja inmobiliaria en Santiago? ¿Una burbuja en Santiago? Indicadores y prácticas índice de autoresíndice de materiabúsqueda de artículos
Home Pagelista alfabética de revistas  

Servicios Personalizados




Links relacionados

  • En proceso de indezaciónCitado por Google
  • No hay articulos similaresSimilares en SciELO
  • En proceso de indezaciónSimilares en Google


ARQ (Santiago)

versión On-line ISSN 0717-6996

ARQ (Santiago)  no.102 Santiago ago. 2019 


Are We Facing a Real Estate Bubble in Santiago? Housing prices: a call to action

Javier Hurtado1 

1 Gerente de Estudios Cámara Chilena de la Construcción, Santiago, Chile.


The strong demand for urban housing in Santiago has resulted in a recent increase in high-rise buildings. Such densification has mainly affected the districts surrounding central areas of the city. However, paradoxically, the increase in supply has not kept the price of the units from continuing to rise. In the light of such phenomenon, in arq we ask, how can such an increase in price be explained? Does it come from speculation?

Keywords: speculation; city; development; planning; debate

Housing prices have significantly gone up over the last decade. Therefore, housing is becoming an increasingly unattainable good not only for vulnerable segments, but also for emerging and middle class people and families. Hence, for some time now it has been argued that we are heading by leaps and bounds to a crisis of housing access and, by extension, to a social crisis of the utmost importance. In this background, it is pertinent to ask what is behind this phenomenon. Have speculative movements led to a real estate bubble? Or is it a reaction consistent with certain economic and social dynamics? I am inclined to the latter as there are multiple reasons that can seriously back it.

On the one hand, the demand for housing has remained strong. Without going any further, in the first quarter of the current year real estate sales reached figures that exceeded both the ones recorded for the same period last year as well as the historical average. The low interest rates in mortgage loans largely explain this behavior, especially as they have encouraged a large number of housing acquisitions for rent. It should be noted that such demand does not follow a homogeneous distribution throughout the urban territory, but instead is rather concentrated in well-established neighborhoods that offer good features in terms of mobility, facilities, and services. The best example is the desire of living in the proximity of subway stations in the Metropolitan Area.

So far so good. The problem comes with the answers - or lack of answers, to be more accurate - that public policies offer to these phenomena. Equipped with an obsolete urban planning system, our cities are developed in a fragmented manner, prioritizing local decisions over an integrated view and objectives that are widely valued, such as the quest for greater social integration throughout the territory. The result is a systematic and significant reduction in many districts’ densities, especially those with larger housing demand, even beyond what their own regulatory plans establish.

Thus, the growing limitation of land available for the construction of houses has caused its price to multiply in different cities along the country. Moreover, in the case of the semi-central districts of Santiago Metropolitan Area - such as Recoleta, Quinta Normal, San Miguel, Ñuñoa, and La Reina - this increase exceeds the 150 % over the last decade. And given that land is by far the input with the greatest impact on the cost of housing projects, the price of housing has gradually risen to the levels currently observed. In fact, a recent study by the Central Bank shows that the increase in the price of land in the main cities of the country explains between 50 % and 60 % of the increase in the price of housing To this, it must be added that construction costs have also been thriven by the legal uncertainty affecting building permits, as well as by phenomena related to compensation and materials costs.

Thus, today 56 % of households are no longer able to access a mortgage loan to finance what we might call the ‘average home,’ with a price about 2,600 UF (100,000 UsD). As a result, both demand and supply in housing have moved towards higher prices, leaving in their wake a significant increase in the housing deficit and, in particular, among allegados (extended families living together), who are not in a position to pay the rent in those places where they have decided to live in.

Summing up, the increase in housing prices answers almost exclusively to the addition of economic elements and territorial management, being the latter the most relevant in the price dynamics of recent years. A dynamic that, let’s be clear, will not be reversed if the demand for housing continues to grow and its supply is restricted - as has been happening until now. Faced with this reality, us the agents that could have a certain degree of incidence within the urban policy debate have two possibilities: either we continue to being engaged in a zero-sum game where each one seeks to impose its own view, or we work together with the authorities and the civil society to provide a substantive and long-term solution.

As evidenced, the most urgent challenge is to foster to a new planning system, in order to reach consensus on sustainable urban development strategies that reconcile different views, interests, and desires, and open the doors of cities to current and future generations.


Javier Hurtado Cicarrelli Industrial Engineer, Pontificia Universidad Católica de Chile. Master of Science in Engineering, Stanford University, California. Research Manager at the Chilean Construction Chamber since 2006 and member of the Advisory Board at the Instituto Libertad y Desarrollo.

Creative Commons License Este es un artículo publicado en acceso abierto bajo una licencia Creative Commons