Economy and Real Estate Market — September 2025
October 9, 2025
The Chilean economic situation remains marked by multiple tensions that limit sectoral performance. Politically, ongoing debates on structural reforms increase investor and consumer caution and raise the risk premium in expectations. Economically, growth is moderate while inflationary pressures persist. In this context, monetary authorities are acting cautiously and prioritizing price stability.
At the external level, several factors exacerbate uncertainty: US trade policy, the Russia-Ukraine conflict, sluggish activity in Europe, and financial strains in China represent ongoing risks. Chile's high exposure to external shocks increases the likelihood of adverse effects on domestic inflation.
Locally, credit interest rates have been significantly higher since 2021 due to monetary tightening. These increases raised housing financing costs to levels not seen since 2009 and shortened typical mortgage terms from up to 30 years to around 20–25 years. A slight easing in long-term rates emerged in late 2024 and early 2025, allowing the mortgage market to function under somewhat more favorable conditions. The Central Bank's Banking Credit Survey indicates that in the second quarter of 2025 banks did not report major changes in credit standards for companies, although some relaxation was observed for consumer credit.
The labor market still shows lasting effects from the health crisis: approximately 2 million jobs were lost during that period. Recovery has been gradual and employment now exceeds pre-pandemic levels in some segments, but the unemployment rate remained elevated, estimated at about 8.7% at the end of the second quarter (according to sector reports).
Consumer and business confidence remain low despite isolated improvements. The Monthly Business Trust Indicator (IMCE), developed by ICARE and UAI, reflects persistent pessimism in sectors such as construction, while mining and trade report more optimism. These confidence levels make many investment decisions conditional, with strategic choices often postponed until macroeconomic clarity improves.
For the real estate sector, second-quarter 2025 data show mixed signals. Housing sales posted a modest 1% year-on-year increase, and demand grew 23% compared with the previous quarter. Apartment sales rose by 2%, while house sales fell by 3%. Housing supply expanded by 4%, reaching about 108,000 available units (approximately 89% apartments and 11% houses). The sales pace weakened: it is estimated that around 30 months would be required to absorb the current supply, exceeding typical balanced-market ranges.
In summary, the Chilean economy is in a period of adjustment. High interest rates, political uncertainty, weak expectations, and a challenging real estate market have many actors adopting a wait-and-see stance. Projects able to tolerate risk and anticipate recovery may capture value under these conditions.
Market participants remain cautious, and opportunities will likely favor those positioned to withstand short-term volatility and benefit from a potential recovery.