The Chilean real estate market for the most part was saved by a rather unusual political move. The Chilean government did something few governments have ever done: saved money. They took the copper revenues and put them away. So, when the international financial collapse came they had a surplus to inject large amounts of cash in to stabilizing both the peso and the economy. One of those moves was directed at home loans and builders. This has a trickle down effect that stabilized the real estate markets across Chile. In fact, it was well in to 2009 before real signs of a recession started showing in Chile, where by comparison real estate markets in other parts of the World had been in rapid pull back for several years. Chile was very late to the economic downturn in almost every respect.

In our own business providing real estate related legal services to foreigners in Chile, it was obvious even as far back as early 2007 that many foreign buyers could not get loans in their home country to buy property in Chile based on the value of their property outside Chile; yet, in Chile the economy and real estate market continued to hum along very nicely.

Overall, it would be safe to say that home prices and real estate prices across Chile declined no more than on average of around 20% across the country. Most of those declines where in urban homes designed for Chilean families. Rural real estate, often the most appealing to expats and foreign investors, held there own well in to 2009. Only in late 2009 have we finally started to see deals on rural property start to show, as the international economic crisis took a while to really reach the more remote parts of Chile and the Patagonia. The rural land owners in the South of Chile are fairly recession proof.

Some notable events and changes however from our previous years reports on Real Estate trends in Southern Chile and the Patagonia:

Real Estate on Chiloe Island

The Island of Chiloe has been popular with foreigners in previous years, but not so popular with Chileans. It is sort of remote. With the reduction in interest rates however in the Chilean banking system, suddenly Chileans decided that it was a good idea to invest in real estate rather than let their savings be eroded sitting in the bank. Interest rates have effectively gone to near 0% on savings. This was especially true considering the good deals in real estate available. Unlike other stimulus programs around the World that seemed to be designed to force people to horde money, the Chilean stimulus program got them out and spending money in ways they never had before.

Chaiten and Futaleufu

What a year for this remote region of Northern Patagonia. In 2008 a 10,000 year old dormant volcano erupted. What was once one some of the most valuable land among foreigners in Chile and possibly South America, went to almost zero value overnight; or, so it seemed. There where four things that saved the real estate market in the Northern Palena region of the Patagonia.

First, a year later much of the damage in the Futaleufu area turned out to not as bad as everyone thought it would be, accept in the most hard hit valleys directly in the path of the ash. Reports are things have turned green again, and cleanup has gone well.