The Brazilian housing market remains strong with steady house price increases. The final quarter of 2013 saw house prices rise by 3.5% from the previous quarter with all major Brazilian cities benefitting from increased property values. Brazil continues to hold its position as a hot property location for real estate investors.
The continuous decline in interest rates during recent years has encouraged the housing boom. The Banco Central do Brasil’s Selic rate fell to 7.25% in 2012, down from the highs of 26% in 2003. Mortgage rates have followed the Selic rate down and this in conjunction with a healthy job market and increasing wages, has stimulated demand for property as more and more people are now able to afford and obtain finance to purchase property.
Some critics are concerned the surge in home prices is a result of credit expansion that could be considered unsustainable. However, foreign investors remain positive due to the upcoming FIFA World Cup in June 2014 and the Olympics in Rio De Janiero in 2016. These huge events are having a positive impact on the housing market, particularly in the cities directly involved with the celebrations.
The housing market receives huge support from President Dilma Rousseff. Rouseff’s administration has poured money into the property market using federal subsidies and state bank loans. The government is committed to follow through on the country’s plan to build two million affordable homes by the end of 2014. This is part of the country’s pledge to lift Brazilians out of poverty and it is proving successful. The number of middle class Brazilians now stands at an impressive 54% of the population, according to Cetelem BGN and Ipsos Research Institute, up from 34% in 2004.
The increased wealth across the Brazilian population will continue to be a significant driving force behind further growth in the housing market, which is expected to stay strong throughout 2014. Forecasts predict higher price gains than in any other country by the end of 2014, according to Fitch Ratings’ Global Housing and Mortgage Outlook.
Source: Global Property Guide