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Real Estate Market in Brazil Remains Strong

Real Estate Market in Brazil Remains Strong

Strong Real Estate Market in Brazil Good News for Investors
Contrary to the predictions of abrupt bubble bursts, the real estate market in Brazil remains strong, with stable house price increases. Brazil’s composite FIPEZAP house price index rose by 12.7% (6.5% inflation-adjusted) during 2013 from a year earlier. In the fourth quarter of 2013, house prices increased by 3.5% (1.4% inflation-adjusted) from the previous quarter.
House Prices in Brazil During 2013:
In Sao Paulo, house prices rose by 13.9% (7.6% inflation-adjusted), the lowest year-on-year rise since 2008. House prices in Sao Paulo increased 15.8% in 2012, 27% in 2011, 24% in 2010, and 21.6% in 2009.
In Rio de Janeiro, house prices increased by 15.2% (8.8% inflation-adjusted), slightly higher than the 15% annual increase recorded in the previous year but far lower than the 34.9% year on year rise seen in 2011.From January 2008 to December 2012, average house prices in São Paulo and Rio de Janeiro rose by 159% (98% inflation-adjusted), and by 194% (124% inflation-adjusted), respectively. The mortgage market also grew from just 1.5% of GDP in 2007 to about 6.2% of GDP in 2012.
Brazil’s housing boom has mainly been propelled by a continuous decline in interest rates in recent years. From a high of 26% in 2003, the Banco Central do Brasil’s Selic rate fell to 7.25% in 2012. Mortgage interest rates followed the Selic rate down.

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