You are here :: Panama Real Estate » Panama-real-estate » Food-prices-stabilize

After three years of progressively higher food prices Panamanians are getting a break. The government index of food costs, the “Canasta Basica” did not change between February and March of 2007.

For years Panama has tracked food costs with a hypothetical shopping basket, the Canasta Basica (basic basket). The assumption is that a working adult will consume 2,305 calories a day. Based on the assumption that the average shopper is buying for 3.4 people the Canansta Basica contains a balanced diet for 3.4 persons.

The hypothetical food basket contains coffee, mayonnaise, fruit drinks, and white sugar as well as specific cuts of beef, pork, poultry, fish, and preserved meats such as chorizo. In addition the staples, rice, potatoes, platano, yucca, milk, and eggs, are included.

Delay in the Drop in Food Prices

When the price of oil dropped the price of gasoline followed soon. Next the cost of electric generation came down followed by electric bills. However, economists warned that it would take six months for the high costs of production caused by high oil prices to work its way out of the production chain for food and consumer goods and it has.

Another set of circumstances has lowered prices, which is the global recession and reduced demand for structural steel and concrete. Thus Panama is seeing a well deserved pause in inflation.

Panama Real Estate and Inflation

Inflation has left the high end of Panama’s real estate market too. With fewer North American buyers prices of high end condos are dropping just as contracts are due to be signed as buildings are finished. This has caused a problem for recent buyers who put their 30 percent down a year or so ago and now are seeing the value of their property drop by an equal amount.

The world economic crisis has of course affected Panama. The biggest affect we are seeing is that there are an increasing number of buyers (especially speculators) who can no longer close on pre-construction properties due to their personal situation. Generally, they have a 30% deposit already paid, so they are keen to recoup all or some of their deposits if nothing else. Many of the buildings coming online now have almost doubled in price, resulting is some very good deals from people who are unable to close. This is particularly true of the high end condo buildings in Panama City, especially around the Bay.

For those planning to live in their condo this is not a problem as prices will go up again as the economy sorts itself out. However speculators are stuck. They put down their 30 percent expecting to make a big profit on the appreciation of their condo and find that they will lose their investment if they sell after closing, which was their intent.

Anyone who has three or four properties will need to sell at a loss or rent out the condos until prices go up.

ABPanama is working to bridge the gap between sellers in a bind and buyers with cash.