Brazil Property Prices on the Rise

Against all expectations, against good sense, Brazil’s housing sector continues to boom!  House prices in São Paulo rose by 18.8% during the year to July 2012, according to the FIPE ZAP Index of Dwelling Price Offers (up 12.9% when adjusted for inflation). The price increase was even greater at Rio de Janeiro, up 19.8% (13.9% in real terms) during the same period.

From January 2008 to July 2012, average house prices in São Paulo and Rio de Janeiro rose by 144.1% (91.7% in real terms), and by 178.2% (118.4% in real terms), respectively.

Property sales for the first half of 2012 were up 2.6% to 11,900 units, according to the Sindicato da Habitação (Secovi-SP). In contrast, sales values were BRL 6 billion (US$ 2.95 billion), down by 1.5% during the same period.

Two major international sporting events are helping to arouse foreign interest in Brazil - the hosting of the 2014 Soccer World Cup, and the 2016 Olympics.  But although house price rises have been strong, economic growth is noticeably slowing.

Brazil’s property market is overvalued by around 50%, claims Capital Economics, who have produced a whole raft of reasons why disaster hangs over the Brazilian property market.   Yet an expanding mortgage market is making finance easier to than ever to access.