Home and Land Prices in Chile

The first situation we are going to ignore are the track homes in Chile. These would be developments by major construction companies in Chile and their artificial communities. In our experience, most foreigners are simply not interested in these sorts of communities. In Chile they tend to be developments of up to a 1,000 homes at a time that are exact copies with no variation what so ever from house to house. The price is the price on these, and there are a thousand more just like them next door. Figuring out what they are worth is not hard. If one house has a problem, chances are they all have it.

Second thing we are going to ignore are pricing of houses and apartments in the major cities of the central region of Chile, such as Santiago, Vina Del Mar, and so on. These big metropolitan cities tend to for the most part follow the rules you would find any where in the World, and there are lots of similar properties for sale and a mature real estate market to sell them with a more or less fixed market price.

House Price vs. Property Price in Chile

When considering a home for purchase in Chile, the first thing you need to do is separate the raw property value from the house value. As counter intuitive as it may seem, many times any structure on a property in Chile will more than double the asking price over the cost of what building a similar or even better building on the same property would cost. This is not always true, but it is very common as you move out from the Metropolitan and Central regions of Chile towards more rural areas such as exist in Southern Chile. Towards the end of the article, we will explain a bit of why we believe this is such a common cultural phenomena in Chile.

A good starting point is to look at similar raw land in an area, even if you only wish to buy an existing house in Chile. What does that empty lot next door cost? Look at several lots or parcels to get an idea of what the land is worth.

Chile Real Estate Tip 1:
Whenever looking at advertising in the Chilean papers pay attention to how they order the advertising. Do they say 'house with land', or 'land with house' in the advertising? This is an important clue as to what the seller views as more valuable. Sometimes, houses will be so poor that the seller will not even mention until you are on the property that there is a house. If the land comes first, chances are that is what is being sold.

Social Class Perception in Chile

The reason why checking the raw land values is so important in Chile is to get a feel for what the area is valued at apart from the structure. In Chile, because of complex social histories, two intrinsically equal properties with a comparable house on it can be as much as five times the price or more simply because of social perception of class status. We are not even talking about places that are somehow ghettos or dangerous or run down; simply perceived to be for the lower class or upper class in Chile.

The irony is that sometimes they are not even correct. For example, an area where the upper class or rich of Chile sold their property years before, and the lower to middle class continue to buy in to as the area is perceived among Chileans to be a desirable place to live. For example, owning property in the area around Pucon is often viewed by middle to lower economic classes as proof of their new affluence, even though very few of Chile's old money still owns property there.

Also perception of a mature domestic tourism industry in Chile can play a role in what Chileans view as valuable. Chileans will hold certain areas as being valuable because it is a tourism destination. A foreigner will simply see a tourist trap, and not something you would want to live near.

As a foreigner, you may simply not care about anything other than the house is half the price. Often, what Chileans perceive as the most valuable land and locations in Chile, are from an international perspective some of the most worthless properties.

An example might help better understand the cultural difference at play. Los condes in Santiago ( O.K., just one example ) for example is considered one of the most exclusive places to live by Chileans, especially on the hillsides near the mountains overlooking Santiago. Unfortunately, this is also where all the smog and pollution of Santiago settles in the late afternoon and gets trapped by the mountains. So you neither have a view of the city nor clean air to breath; yet, this is where some of the most expensive homes in Chile are built.

House vs. House in Chile

In the Chilean real estate market often two houses right next door to each other will be like Apples and Oranges; yet, the sellers will view their house as being of equal value to the house next door even if their house is inferior. Does this make sense? No! Again, an explanation will follow shortly.

Home Construction Standards

You must also consider that many homes and buildings in Chile will not meet national Chilean building code. In fact, in rural areas it is common to find buildings that are built illegally as the building permit was never requested. Building permits and code inspection are left to the municipalities in Chile, and depending on their budget may or not be enforced in any given area. The building permits are good things to check on any existing construction being considered for purchase, especially in rural areas; that is, if you do not intend to simply tear them down. Inside larger towns and cities, codes are enforced.

Still, if you find a house built to U.S. or European standards of construction expect to pay U.S. or European prices. Say, in the 250,000 to 500,000 U.S. dollar range because it was most likely built by one of the larger construction company in Chile. Good building cost money. Lower your expectations, if you want to be cheap or simply plan to build yourself. You can often build something in Chile much cheaper than you can buy something. Does that make sense? No!

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