In Sao Paulo, house prices fell by 1.96% y-o-y in 2019
Brazil’s housing market remains weak, despite improving economic conditions. In Sao Paulo, house prices fell by 1.96% during 2019, from annual declines of 1.89% in 2018, 1.5% in 2017, 5.53% in 2016, and 7.38% in 2015. On a quarterly basis, house prices in Sao Paulo dropped 1.23% in Q4 2019.
Brazil’s political turmoil
The crisis started in 2013 when the central bank raised key interest rates nine times to 11% in April 2014, causing a sharp economic slowdown.
In 2016, President Dilma Rousseff has been impeached, the speaker of the house has been jailed, five Cabinet ministers have been removed or allowed to step down because of allegations of corruption. Brazil's new president, Michel Temer, is embroiled in a corruption scandal.
Worse, another massive bribery scandal, involving Brazilian construction giant Odebrecht, disrupted politics, not just in Brazil, but in more than half of the countries in Latin America, as well as in Angola and Mozambique in Africa. Odebrecht is behind the construction of venues for the 2014 World Cup, the 2016 Olympics, the metro systems in Caracas, and other huge infrastructure projects.
The crisis helped right-wing candidate and retired army officer Jair Bolsonaro sweep to victory during the October 2018 presidential election on a populist, anticorruption platform. But more than a year into his presidency and not much has changed. Congress blocks most of his plans and his Cabinet is in disarray. In November 2019, Bolsonaro launched a new political party, the Alliance for Brazil (APB), after his relationship with the right-wing Social Liberal Party (PSL) collapsed as they fought for control over its large campaign funds. PSL emerged from obscurity last year to become the second largest party in Brazil's Congress after Bolsonaro made it the vehicle for his presidential run.
In Q4 2019, Brazil’s unemployment rate was 11%, down from 11.8% in Q3, 12% in Q2 and 12.7% in Q1, according to the government’s statistics agency IBGE.
Rents, rental yields: rental yields are moderate ranging from 3% to 6%
Rio apartments costs are around $4,370 per sq. m.
|Brazil: typical city centre apartment buying price, monthly rent (120 sq. m)|
|Buying price||Rate per month||Yield|
|Rio de Janeiro||$709,200||$1,200||3%-4%|
Recent news. Brazil’s economy remains weak, with estimated real GDP growth of just 1.12% in 2019 from a year earlier, following meagre expansions of 1.1% in both 2017 and 2018 and contractions of 3.6% in 2015 and 3.3% in 2016,according to the Ministry of Economy.Despite the economic fallout caused by the COVID-19 outbreak that originated from China, Brazil’s largest trading partner,the Brazilian government expects the economy to grow by 2.4% this year.
In an effort to buoy the economy, the Central Bank of Brazil has slashed its benchmark Selic rate by a total of 225 basis points at its last five meetings, reaching a record low of 4.25% in February 2020.