The slowing Brazilian economy is taking its toll on the country’s real estate market. While it’s not het a crisis, many are concerned. CCTV America’s Paulo Cabral reports.
Brazil's property prices drop due to slowing economyThe slowing Brazilian economy is taking its toll on the country's real estate market. It's not a crisis yet - but there is concern about what may be ahead. CCTV America's Paulo Cabral has this report.
Times are tough in Brazil. Real estate agents like Thiago da Silva are looking for customers wherever they are. Brazilians are still buying property but not as much as a few years ago.
According to a IPEA, a federal research institute in Brazil, there’s a deficit of more than five million housing units in the country. A high real estate demand combined with government incentives and more access to credit has provided steady growth over the last decade. But now there are signs that the market is cooling. Real estate prices are spiraling. Brazilian banks report there are fewer home loans. Between August 2013 and July 2014, lending grew 14.5 percent, well below the 24 percent from the previous year. Between July and August this year, there was a drop of 12 percent. Real estate prices are also declining.
“People who bought property in 2007 or 2008 made a lot of money because prices at least doubled since then. Nowadays, the market is cooling down, so people looking for a good deal can find something if they do good research,” said economist Bruno Oliva.
Analysts say investors are already looking for more profitable options. Large and expensive properties are the hardest to sell nowadays as first time buyers, many with government subsidies, are moving into the market. Over the last 10 years, Brazil managed to reduce its housing deficit and at the same time boost its construction industry. But if the economy doesn’t pick up, forecasters say it will be hard for its people to become homeowners in the short term.