Mexico's Residential Property Market Analysis 2025

Against the background of a sluggish economy and persistent uncertainty tied to global trade policies, sales prices in the Mexican housing market remain resilient and are expected to continue trending upward, although at a more moderate pace.

This extended overview from Global Property Guide covers key aspects of Mexico’s housing market and takes a closer look at its most recent developments and long-term trends.

Table of Contents

• Housing Market Snapshot
• Residential Hotspots
• Supply Highlights
• Rental Market
• Mortgage Market
• Socio-Economic Context

Housing Market Snapshot

Home price growth in Mexico remains resilient, though the pace is gradually aligning with the long-term trend. In the second quarter of 2025, the House Price Index for dwellings purchased with a mortgage, as reported by the Federal Mortgage Society (SHF), rose 8.7% year-on-year compared with the same period in 2024. "Although this growth is slightly lower [than recorded in the corresponding periods in 2024 and 2023], it reflects a healthy stabilization of the market," commented Cristian Benitez Kauffmann, CEO & Founder of AYLEVEL.

The index for second-hand dwellings slightly outpaced the new housing segment, rising 8.84% year-on-year compared with 8.52% for new dwellings, underscoring the limited availability of new supply. By property type, single-family homes recorded a 9.09% year-on-year increase, while condominiums and apartments rose 8.30%.

At the state level, 19 states posted year-on-year growth rates above the national average, while 13 came in below it. The sharpest increases were registered in Quintana Roo (14.68%), Baja California Sur (13.07%), and Nayarit (12.52%), while Mexico City recorded a more moderate gain of 4.90%.

Mexico's house price annual change:

Note: House Price Index: Existing and New Residential Dwellings (2017 = 100)
Data Source: Sociedad Hipotecaria Federal.

During the first half of 2025, the average value of a home purchased with a mortgage stood at MXN 1,862,524 (USD 97,923), with a median price of MXN 1,200,000 (USD 63,090). Mexico City consistently reported the highest average value at MXN 3,871,942 (USD 203,569), remaining the only state above the MXN 3 million threshold. Other high-cost states included Baja California Sur, where the average was MXN 2,600,781 (USD 136,737), and Querétaro, at MXN 2,319,335 (USD 121,940).

Price dynamics of homes purchased with a mortgage, selected states:

Looking ahead, the Mexican housing market is expected to maintain its upward trajectory, supported by structural demand, government programs, and regional dynamics, although the pace of appreciation is forecast to moderate. In June 2025, Fitch Ratings revised its forecast for this year's home price growth to a range of 7-9%, down from the earlier estimate of 8.5-9.5%. For 2026, experts anticipate an increase of 8-9%.

"Housing undersupply and wage growth continue to support home price growth in Mexico. However, we have slightly lowered our price growth forecasts due to increased macroeconomic uncertainty," stated the 2025 Global Housing and Mortgage Outlook Mid-Year Update.

Residential Hotspots:

Housing Profile in Key Submarkets

Mexico offers a broad range of real estate opportunities, accommodating diverse preferences and investment objectives. The market across key cities remains resilient, supported by regional economic activity and shifting demand patterns. Mexico City (Ciudad de México) continues to attract substantial investment, underpinned by a growing commercial sector and population increases. These trends sustain high demand for residential properties, despite persistent affordability challenges. Monterrey, recognized as an industrial and business hub, demonstrates steady appreciation, fueled by corporate growth and cross-border trade. Guadalajara benefits from its thriving technology sector and cultural appeal, positioning it as a compelling destination for both domestic and international investors.

Outside the largest urban centers, several markets are experiencing notable momentum, driven by tourism, second-home purchases, and demand for short-term rentals. The Riviera Maya (notably the municipalities of Solidaridad and Benito Juárez) remains a focal point for vacation properties, bolstered by foreign capital and infrastructure initiatives such as the Mayan Train. Mérida, valued for its safety and quality of life, continues to attract domestic and international buyers, while Los Cabos sees rising demand for luxury properties, further reinforced by ongoing infrastructure development.

Other significant markets include Santiago de Querétaro and the broader Bajío region, where manufacturing-led job creation is fueling household formation and residential absorption. Specialist destinations such as San Miguel de Allende maintain strong resale activity, particularly among expatriate buyers, while markets in Baja California (including Tijuana) are shaped by cross-border dynamics and industrial-driven growth.

Recent data highlight divergent pricing patterns across major residential hubs. The SHF municipality-level House Price Index for Q2 2025 shows that coastal and tourism-oriented municipalities, including Benito Juárez, Solidaridad, and Los Cabos, posted the strongest price gains over one-, two-, and five-year horizons. By comparison, large inland metros such as Monterrey, Guadalajara, and Mérida recorded solid, but more moderate, appreciation relative to resort-driven markets.

House Price Index for dwellings purchased with a mortgage, selected municipalities:

According to the Banorte Housing Price Indicator (INBAPREVI), which applies web-scraping techniques to generate monthly housing data and indices, Mexico City continues to lead the market with the highest average price at MXN 56,899 (USD 3,045) per square meter. Residential supply is dominated by apartments (81.4%), with single-family homes representing 18.6% of the stock. The boroughs of Cuauhtémoc (MXN 69,343, USD 3,710 per square meter), Miguel Hidalgo (MXN 66,757, USD 3,572 per square meter), and Benito Juárez (MXN 55,782, USD 2,985 per square meter) reported the highest median values, while Tláhuac remained the most affordable at MXN 19,129 (USD 1,024) per square meter.

Among the additional markets covered by INBAPREVI, Guadalajara ranks as the pricing leader after Mexico City, consistently registering above the national benchmark. Monterrey and Tijuana fall within the mid-to-upper range, supported by industrial expansion, nearshoring activity, and cross-border demand. In contrast, Mérida and Querétaro remain more accessible growth markets, offering comparatively lower entry costs alongside favorable demographic and economic fundamentals.

Average home prices, selected municipalities:

Supply Highlights:

Government Initiatives Aim to Bridge Structural Supply Gap

The most recent data on Mexico's housing stock is drawn from the 2020 Census, which reported more than 43.9 million dwellings nationwide. Of this total, 80.2% were occupied, 5.7% were used on a temporary basis, and 14.0% were vacant. Housing is most heavily concentrated in urban areas, with the largest shares in Mexico City (12.3%), the State of Mexico (6.9%), Veracruz de Ignacio de la Llave (6.9%), Jalisco (6.7%), and Puebla (4.9%).

Despite the size of the existing stock, a structural shortage persists. BBVA Research estimates a deficit of 2.3 million homes, excluding the additional demand generated by demographic and socioeconomic dynamics. As noted in its latest report, "When taking into account the housing required to meet natural demand, driven by population growth, household mobility, and rising incomes, the total need could reach 4.8 million units nationwide."

To address this shortfall, the federal government has expanded its housing programs under President Claudia Sheinbaum. In August 2025, the Housing for Well-being Program (Programa de Vivienda para el Bienestar, PVB) raised its six-year target from 1.2 million to 1.8 million new homes. The revised plan foresees 1.2 million units financed by Infonavit (National Housing Fund for Workers), 500,000 through Conavi (National Housing Commission responsible for subsidies), and 100,000 via Fovissste (Housing Fund of the Institute for Social Security and Services for State Workers), along with 100,000 credits from SHF (Federal Mortgage Society) for households outside the formal labor market. A parallel program for housing improvements and expansions is expected to support an additional 1.8 million units.

Amid the federal government's expanded housing initiatives, housing production is beginning to show the first signs of recovery following a prolonged contraction. According to the Housing Registry (Registro Único de Vivienda, RUV), 62,068 completed dwellings were reported in the first half of 2025, representing a year-on-year increase of 2.67%. This figure exceeded completions in both 2023 and 2024 but remained below 2022 levels, reflecting the depth of the previous downturn.

Production continues to be geographically concentrated. Ten states accounted for more than 60% of the national total, led by Nuevo León, Jalisco, Quintana Roo, Guanajuato, the State of Mexico, and Tamaulipas, each delivering between 2,500 and 7,000 units during the period.

Experts note that the medium-term outlook will depend largely on the effective implementation of government programs. Should Infonavit and Conavi meet their commitments, a gradual recovery in housing supply is likely to materialize from 2025 onward. However, any delays in execution could slow or reverse the emerging upturn.

Data Source: RUV.

Rental Market:

Expanding Tenant Base and Regional Rent Divergence

In the face of high and increasing property prices in the main cities and smaller communities alike, a growing share of Mexico's population has been opting for rental housing. According to the most recent National Housing Survey published by the National Institute of Statistics and Geography (INEGI), as of 2020, 16.4% of occupied dwellings in Mexico were rented, the proportion increasing from 15.2% previously reported in 2014. In parallel, the share of owner-occupied dwellings dropped from 61.4% in 2014 to 57.1% in 2020.

Mexico's rent price index:

Data Source: OECD.

The survey also showed that more than half of those renting their primary residence (51.4%) did so due to a lack of access to credit or sufficient funds to buy, with a further 9.7% remaining tenants due to potential mortgage payments exceeding their monthly rents.

The Mexican Chamber of the Construction Industry (CMIC) forecasts that rental housing could account for up to 50% of occupied dwellings within the next two decades. "Over the past 20 years, housing prices have grown faster than incomes, driving a sustained expansion of the rental market as homeownership becomes less attainable," noted Luis Armando Díaz Infante, CMIC national secretary. Industry professionals confirm this trend, citing a clear shift from purchase transactions toward rentals as the more financially viable option.

Despite rising demand, rental inflation has remained moderate and typically below the general consumer price index (CPI). The actual rentals for the housing component of the CPI reported by the INEGI registered a 3.48% year-on-year growth in August 2025, slightly below the all-item CPI increase of 3.57%.

Experts caution, however, that these figures may understate the true dynamics of the market due to the prevalence of informal rental arrangements and significant regional disparities. "In some areas, particularly those attracting digital nomads or influenced by short-term rental platforms such as Airbnb, demand and rents have surged. At the same time, other large urban areas remain dominated by informal leasing, often without professional oversight," observed Pablo Cotler, research professor at Universidad Iberoamericana.

Data Sources: INEGI, OECD.

Market data from the real estate platform Inmuebles24 illustrates these contrasts. According to the most recent analysis, in 2025, average asking rents for 65-square-meter, two-bedroom apartments increased most sharply in Guadalajara and Mexico City, though results varied widely across neighborhoods.

In Guadalajara, rents rose from 22% in Puerta del Hierro (Zapopan Sureste) to 87% in Moderna (Zona Industrial). In Mexico City, Del Bosque (Miguel Hidalgo) nearly doubled from MXN 18,000 (USD 898) in April 2023 to MXN 36,381 (USD 1,816) in April 2025, while Condesa (Cuauhtémoc) recorded a more modest 17% increase. In Monterrey, growth was concentrated in Villas de San Agustín (San Pedro Garza García), where rents rose 88%, compared with only 5% in Fuentes del Valle within the same borough.

Average asking rents for a 2-bedroom apartment, key submarkets, selected boroughs/neighborhoods:

Gross rental yields for apartments in Mexico averaged 5.69%, according to research by Global Property Guide conducted in May 2025, down from 6.13% previously reported in November 2024. Among the monitored regional submarkets, the highest average yield was observed in Monterrey (6.32%), Mérida (6.09%), and Guadalajara (5.93%). In the capital, the average yield stood at 5.74%.

Mortgage Market:

Lending Activity Driven by Public Institutions, Bank Loans Still in Decline

Reflecting the overall disinflation trajectory in the country, the Bank of Mexico (Banxico) has continued to bring down its monetary policy rate, the overnight interbank target rate, in 2025. Since March 2024, when the easing cycle began, the target rate was gradually reduced from the 11.25% peak to the current 7.75% standing announced in August 2025.

Mexico's mortgage loan interest rates:

Data Source: Banco de México.

Commenting on the most recent decision to continue the rate-cutting cycle, the regulator noted that it's consistent with the current inflationary outlook, as well as the behavior of the exchange rate, overall weakness of economic activity in the country, and the possible impact of changes in trade policies worldwide.

Data Source: Banxico.

Despite the established downward trajectory for the Banxico target rate, mortgage rates in Mexico have been relatively stable, with the average nominal interest rate for fixed-rate mortgages most recently reported by the central bank at 11.63% in July 2025, demonstrating only marginal fluctuations in the last two years. This relative insensitivity of mortgage rates to changes in monetary policy can be attributed to a high ratio of non-market-based loans provided by public institutions in Mexico.

The 2025 mid-year housing and mortgage outlook from Fitch Ratings doesn't anticipate this dynamic to change drastically in the upcoming periods, forecasting mortgage rates in Mexico between 10.5% and 11.5% by the end of 2025 and between 10.0% and 11.0% by the end of 2026.

Nominal interest rates on fixed-rate mortgage loans to households:

In terms of new mortgage originations, the reporting from BBVA Research shows that the Mexican mortgage sector presents a mixed picture, with signs of recovery but also structural challenges. According to the latest available figures, new lending in 2024 grew by 10.2% in volume and by 2.7% in value, compared to 2023. However, this positive dynamic was driven primarily by by public institutions, such as the Institute of the National Housing Fund for Workers (Infonavit) and Housing Fund of the Institute for Social Security and Services for State Workers (Fovissste), while new lending in the private banking segment was still in decline (-4.2% year-on-year in volume and -6.9% year-on-year in value of loans granted).

"In an environment where most indicators related to mortgage activity (such as the generation of formal employment and the appreciation of housing) show a slowdown, the placement of mortgages increased in 2024, mainly due to renewed momentum in the affordable-income segment," said the report.

Throughout last year, a total of 512.0 thousand new mortgage loans were reported, of which 402.3 thousand (78.6%) were granted by public lenders, 120.1 thousand (23.5%) by private lenders, and 10.4 thousand (about 2%) were co-financed. The total value of new loans during this period amounted to MXN 581.5 billion (USD 31.7 billion); of those, mortgages granted by public lenders reached MXN 296.4 billion (USD 16.2 billion), while mortgages granted by the private sector amounted to MXN 285.0 billion (USD 15.6 billion). The average loan amount across all lenders fell by 6.8% year-on-year to MXN 1,136 thousand (USD 62.0 thousand), reflecting a continued trend toward lower-value housing.

BBVA Research expects the mortgage sector to continue a gradual recovery in 2025, supported by the new housing policy of Infonavit and the National Housing Commission (Conavi) aimed at increasing the supply of affordable housing.

Other experts also note that lending activity in the upcoming periods will be impacted by wider macroeconomic factors. "[The behavior of the market] will depend on whether we enter a recession or not. People are starting to become risk-averse, and that means not taking on debt in any form, including mortgages," said Jesús Ramón Orozco de la Fuente, director of Tinsa México by Accumin, as quoted by El Economista earlier this year.

Against this background, the relative size of the mortgage market in Mexico remains limited, estimated to equal just 10.8% of GDP at current prices in 2024. As of Q2 2025, the total value of outstanding mortgage loans stood at MXN 3.8 trillion (USD 193.5 billion), showing a moderate 2.7% growth since the beginning of the year and a 5.4% growth since the same period in 2024. Bank credit comprised 39.8% of the stock, up from 25.0% in 2005.

Data Sources: Banxico, World Bank.

Socio-Economic Context:

Inflation Still Above Target, Growth Sluggish

The Mexican economy continues to decelerate amid global trade uncertainties. Following a 3.2% expansion in 2023, it slowed to a 1.5% real GDP growth in 2024 and is projected to remain sluggish this year. The July 2025 update of the World Economic Outlook from the International Monetary Fund (IMF) expects Mexico's GDP to grow by just 0.2% in 2025 and by 1.4% in 2026, while the World Bank projects growth of 0.2% and 1.1%, respectively.

"Real GDP growth is projected to come to a halt in 2025 as uncertainty in trade policy and the revision of the United States-Mexico-Canada Agreement (USMCA) dampen investment and exports," said the World Bank earlier this year.

Based on stronger-than-expected performance in Q2 2025, however, Banxico recently revised its GDP growth estimates for 2025 from 0.1% to 0.6% and for 2026 from 0.9% to 1.1%. "The Mexican economy has performed better than the external environment would suggest and could continue performing better than anticipated as long as the adverse effects of changes in US economic policy take time to materialize," the central bank commented.

In parallel, Consumer Price Index (CPI) inflation in Mexico eased from 7.9% in 2022 to 5.5% in 2023 and 4.7% in 2024, and was most recently reported by the INEGI at 3.6% in August 2025 － still above the central bank's 3% target. The IMF forecast currently expects the inflation in Mexico to average 3.5% in 2025 and 3.2% in 2026, which generally aligns with the respective 3.7% and 3.6% figures from the World Bank. Banxico forecasts the indicator to fall to the target level in the second half of 2026.

Data Source: IMF.

In Mexico's labor market, the unemployment rate trend remained stable throughout 2024 and the first half of 2025, most recently reported by the INEGI at 2.6% in July 2025. However, there are growing concerns about formal employment and job creation in the country in the near future, as the main implication of a slower economic growth for the labor market is the corresponding slowdown in job openings across the country.

The latest quarterly report from Banxico expects only between 40 and 200 thousand formal jobs to be added in 2025 (excluding jobs from digital platforms), which is notably less than the 220-420 thousand range estimated at the beginning of the year. According to the figures from the Mexican Social Security Institute (IMSS) cited by El Economista, as of August 2025, formal job creation in the country fell by 40.7% compared to the previous year, representing the weakest result for a similar period since 2009 (excluding the atypical 2020), despite recent formalization of over 133 thousand positions at digital platforms like Uber and Didi.

Data Source: INEGI.

Overall, a sustained track record of strong policies, economic fundamentals, and institutional policy frameworks have helped Mexico maintain a sound macroeconomic position, notes the IMF staff report. The country's public debt remains relatively low, proactive monetary policy is bringing inflation down, and benefits from a realignment of global supply chains may be materializing.

At the same time, the outlook for economic activity remains uncertain due to a complex external environment that continues to pose significant risks. The latest assessment from Banxico highlights that changes in economic policy by Mexico's main trading partner, the United States, could not only constrain growth but also generate additional impacts whose magnitude, timing, and duration remain highly uncertain. Other factors weighing on Mexico's economic performance include a further slowdown in the US economy, episodes of financial market volatility, intensifying geopolitical conflicts in various regions, and a potential reduction in public spending domestically.

Amid these economic headwinds, housing has emerged as a particularly pressing social challenge. Earlier in 2025, Claudia Sheinbaum of the ruling Morena party won a historic landslide election to become Mexico's first female president, pledging to expand housing supply and strengthen affordability programs. These commitments come in the context of mounting tensions in Mexico City, where protests in neighborhoods such as Roma and Condesa have highlighted the pressures of gentrification and rising rents, partly fueled by the influx of digital nomads. While some demonstrations turned confrontational, both federal and city authorities have proposed measures to regulate rents and increase affordable housing, framing the issue as central to Sheinbaum's broader agenda of inclusive growth

Sources:

1. National Institute of Statistics and Geography (INEGI)
   1. Economy and Productive Sectors (ES): https://www.inegi.org.mx/
   2. Consumer Price Index (CPI): https://en.www.inegi.org.mx/
   3. Employment and Occupation: (ES): https://www.inegi.org.mx/
   4. Census of Population and Housing 2020: https://en.www.inegi.org.mx/
   5. National Housing Survey (ENVI) 2020: https://en.www.inegi.org.mx/
2. Bank of Mexico (Banxico)
   1. Monetary Policy Statement, August 7, 2025: https://www.banxico.org.mx/
   2. Quarterly Report April-June 2025, Executive Summary: https://www.banxico.org.mx/
   3. Monetary Aggregates and Financial Activity in July 2025 (ES): https://www.banxico.org.mx/
   4. Banking and Alternative Financing Sources to Domestic Private Sector: https://www.banxico.org.mx/
3. Federal Mortgage Society (SHF)
   1. SHF Mexican Housing Price Index, Q2 2025 (ES): https://www.gob.mx/
   2. The Six-Year Goal of the Housing for Well-Being Program Has Been Increased… (ES): https://www.gob.mx/
4. Institute of Statistical and Geographic Information (IIEG)
   1. House Price Index for the Second Quarter of 2025 (ES): https://iieg.gob.mx/
5. Registro Único de Vivienda (RUV)
   1. Strategic Information, Basic Figures (ES): https://portal.ruv.org.mx/
6. International Monetary Fund (IMF)
   1. Country Overview: Mexico: https://www.imf.org/
   2. 2024 Article IV Staff Report: https://www.imf.org/
   3. World Economic Outlook Update, July 2025: https://www.imf.org/
7. Organization for Economic Co-operation and Development (OECD)
   1. OECD Data Explorer: https://data.oecd.org/
8. World Bank
   1. World Development Indicators: https://databank.worldbank.org/
   2. Global Economic Prospects, June 2025: https://thedocs.worldbank.org/
   3. Mexico MPO, April 2025: https://thedocs.worldbank.org/
9. BBVA Research
   1. Real Estate Outlook Mexico, First Semester 2025 (ES): https://www.bbvaresearch.com/
10. Banorte
    1. Housing Prices in Mexico Increased 3.8% annually by July 2025 (ES): https://banorte-v2.cd.invdcloud-is.us/
11. Mexican Chamber of the Construction Industry (CMIC)
    1. The Rental Market is Growing Due to Inability to Buy a Home in Mexico: https://www.cmic.org/
12. Fitch Ratings
    1. Fitch Affirms Mexico at 'BBB-'; Outlook Stable: https://www.fitchratings.com/
    2. 2025 Global Housing and Mortgage Outlook Mid-Year Update: https://www.fitchratings.com/
13. El Economista
    1. Mortgage Loan Placement Falls in the Banking Sector (ES): https://www.eleconomista.com.mx/
    2. Mortgage Credit, Facing the Challenge of Being Dynamic in a Challenging Environment (ES): https://www.eleconomista.com.mx/
    3. Formal Job Creation From January to August Fell to 216,538 Jobs (ES): https://www.eleconomista.com.mx/
    4. Employment in Mexico 2025: Uber and Didi Fail to Stem the Decline in Formal Employment (ES): https://www.eleconomista.com.mx/
14. AP News
    1. Mexico City Plans to Tackle Gentrification After Protests Against Mass Tourism: https://apnews.com/
15. AYLEVEL
    1. Real Estate Market 2025: Where to Invest for Maximum Capital Gains (ES): https://aylevelmag.com/
16. Cronica
    1. Rents and Inflation: Are We Measuring It Right (ES): https://www.cronica.com.mx/
17. Construction World Mexico Magazine
    1. High Rents, Evolution in Neighborhoods of 5 Cities (ES): https://worldconstruccion.mx/
18. Yahoo Finance
    1. Six Keys to Understanding Mexican Real Estate Sector in 2025 (ES): https://es-us.finanzas.yahoo.com/