As Brazil’s economy slows, so too has it’s real estate market boom. CCTV America’s Paulo Cabral reported this story from Sao Paulo.
Slowing economy stalls Brazil\'s real estate growthAs Brazil's economy slows, so too has it's real estate market boom. CCTV America's Paulo Cabral reported this story from Sao Paulo.
Gilson Porto began his career as a real estate agent seven years ago when Brazil’s property market was booming due to increasing wages and easier credit. But starting in 2013, business began to slow along with the country’s economy.
“A few years ago people would come into this office and ready to buy. Now they just come to ask prices, to look around. Those willing to lower their prices are getting to sell their property, but those who are not flexible are really not doing business,” Porto said.
According to real estate property index Fipe-Zap, housing prices rose steadily until 2011 to 26.32 percent. In 2012 and 2013, the market lost steam but still posted decent results, at 13.66 percent and 12.73 percent respectively. In 2014 it saw a sharp decline, and the 6.7 percent appreciation barely made up for inflation.
“All the uncertainties and poor prospects for the economy make people think twice before buying property, so this slows down the market. As a consequence, prices also went down. In 2015, I would be surprised if real estate prices drop in real terms, by rising less than inflation,” Fipe-Zap analyst Bruno Oliva said.
When real estate prices were rising steeply, there were fears of a bubble in the making. But analysts said this recent gradual devaluation suggested that is not the case. The market was heated because for the first time many Brazilians had the means to buy property, experts said.
“We don’t have a bubble. A bubble means a lot of increases in prices for nothing. You had real reasons for the expansion of the prices in Brazil. After this, we have to reduce, to put the prices in their correct level as a matter of fact,” finance professor Fabio Gallo said.