Living Costs Up But Property Costs Down As Much As 25%–Regrouping On The Cost Of Living In The Panamanian Capital
When I wake up Sunday mornings, I don’t always have an idea in mind for this dispatch. This week, though, all week, I’ve intended to write today about the cost of living in Panama. I’ve mulled the subject over, jotted down prices for particular items I wanted to highlight, discussed the topic with Lief and others…
Now I sit down at my laptop and realize, again, how murky this cost of living topic really is.
I’d planned to open with the following line: “The cost of living in Panama City has risen 20% to 25% in the three-and-a-half years we’ve been living here.”
In fact, I wrote that line. Then I proceeded to use examples from the notes I’d made throughout the week to support the claim. Only many of them didn’t.
When we moved here, a gallon of milk cost US$3.75. Today, it’s US$4.75. Big jump, of more than 25%. About 7% a year, on average.
Same is true for a loaf of bread, which cost US$1.25 when we moved here and costs US$1.60 today, and a Pizza Hut personal pizza meal combo (a favorite of Jackson’s). For this, we paid US$3.25 when Jack arrived on the scene with us. Today the same lunch costs US$3.95.
Meantime, three-and-a-half years ago, a pound of ground beef cost (in the place where we buy it) US$2.90. Now it costs US$2.60. I won’t bore you with more grocery cart examples but will ask you to take my word for it: Some cost as much as 25% more today than they did when we first began shopping for groceries in this city three-and-a-half years ago. Other things cost about the same or even a little less, like the pound of ground round.
One of the biggest bargains in Panama City when we moved here was a movie ticket. You could see a first-run movie in English for US$3.25. Today that same regular showing ticket costs US$3.95 (depending on the theater…today there are also more options for where to see a movie and more screens than when we were first movie-goers in this town, and prices vary a little cinema to cinema). Panama City theaters also offer VIP seating. These tickets cost US$8.75 when we bought them for the first time. Today, they are US$10.50, which is about the same as a regular seat in a movie theater in Baltimore, Maryland (my most ready point of reference in the States).
The big bargain in current-day Panama City movie-going is concessions. A large popcorn and two large Cokes combo is but US$4.
Lief’s haircut cost US$3 when we moved here…and it costs US$3 today. Dry cleaning is one of this city’s biggest bargains. Our dry cleaning bill worked out to about 90 cents per item (averaging all things, suits and dresses with blouses and shirts) three-and-a-half years ago…and works out to about US$1 today. We send nearly everything to the dry cleaner except jeans and underwear.
Panama City residents are currently up in arms over the cost of gasoline. The government was subsidizing the price at the pump but stopped, and prices have risen to over US$4 a gallon. I leave gas prices aside from the general cost of living, though. Yes, they can be a significant part of a family’s budget, but they are also affected by bigger-picture variables and can operate outside the local economy.
Back to my intended opening point: The cost of living in Panama City has risen in the time we’ve been living here, but, in fact, probably not by as much as Lief and I thought before we took this closer look today. Some costs are up noticeably, others only marginally, and some things we buy day-to-day actually cost less today than they did three-and-a-half years ago.
We eat out maybe twice a week, on average, and, recollecting prices in the restaurants we’ve returned to again and again over the past few years, we’d say they’ve increased only slightly. This is anecdotal, not scientific data, as we haven’t kept a spreadsheet. Still, Lief, more careful with our money than I am, is comfortable saying that restaurant prices are not worryingly more today than they were three-and-a-half years ago.
We’re waiting now for them to increase further, however, because the minimum wage in Panama has been increased from US$416 to US$490 per month. Most restaurant staff earns the minimum wage, meaning restaurant owners are now struggling to absorb a nearly 20% increase in salary overhead. They’ll have no choice but to pass that along to diners, as some have done already.
What’s the bottom line of all this? Panama City isn’t a “cheap” place to live. It wasn’t when we moved here three-and-a-half years ago, and that claim would be a little less true today.
On the other hand, as I point out often, you want to consider cost of housing separate from cost of living, as these two things can operate independently of each other. Panama City over the past three or four years is a great example of what I mean by that.
We moved to Panama just as property markets around the world began a decline that would continue for the next three-plus years (and that, in some places, continues still today). We arrived just as the Panama City property bubble seemed breezing toward its pin. I spent weeks searching for a rental that I thought would be big and comfortable enough for our family and that came with a rental rate that wouldn’t set Lief’s head spinning. We paid more than we’d budgeted, more than we wanted, to rent a place I wasn’t really happy with. But that was the market.
Within six months, the market changed. Panama City’s property bubble didn’t pop, but it began, just after we became residents of the city, a slow exhale that has brought rental prices down by as much as 25% from their highs of 2008. Much easier today than back then to find the apartment you want in the neighborhood you prefer for a price that seems reasonable. This is mostly thanks to increased and increasing supply. And it’s great news for the would-be renter.
The sales market, too, has slid over the past few years so that prices per square meter stand today, as well, about 25% less than during the Golden Era. As with rental rates, this deflation was needed and welcome and largely a result of added supply.
Panama City is seeing greater numbers of both tourists and foreign businessmen, some passing through, some stationed here long term. Meantime, it also has been fostering greater and greater numbers of residents who qualify as middle class and who both want and can afford to buy a home of their own. Great volumes of new housing supply have continued to come online, from Trump Tower (no, the local middle class isn’t buying here, but transient execs are) to suburban-style communities within commuting distance of the capital (where more and more of Panama City’s local workforce is migrating). It’s not all being absorbed, and some high-rises stand with many unoccupied units, but the rate of purchase is enough to keep prices from continuing down.
That’s Panama City. Elsewhere in Panama? It’s a completely different story, with different supply-and-demand variables in play. I’ll leave a discussion of the cost of living and of housing in Panama beyond its capital for another day.
Suffice for now to say that, while Panama City is not cheap, elsewhere in this country can be.