In recently weeks and months I’ve seen a lot of new appartment blocks going up in Lima. It is strikingly similar to Ireland in the mid 2000s, cranes everywhere, new shopping malls opening up and they are full of shoppers.
The value of the Nuevo Sol however is plummeting, S/ 3 could buy you $1 a year ago and now the rate is 3.47=$1. This is going to bring inflation.
With regard to house prices, these extra appartments will increase supply causing a steep fall in house prices. They have already started falling but have a long way to go. To what extent the banks are tied in with these property developers I’m not sure.
A major bank BCP uses an image of Homer Simpson saying “woo-hoo llegó mi tarjeta”, this spend and dam the consequences attitude is exactly the problem. Time will tell.
(eugeneward78) A blog 