Trend: in Sao Paulo, house prices fell by 2.38% y-o-y in Q2 2018

The outlook for Brazil’s housing market is improving, fuelled increasing construction and home sales, as well as a positive economic outlook. In Sao Paulo, house prices fell by 2.38% during the year to Q2 2018, from y-o-y decline of 2.15% in a year earlier. Quarter-on-quarter, house prices in Sao Paulo fell by 1.22% in Q2 2018.

Analysis:  no end in sight for 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 uncertainty is exacerbated by the general elections scheduled this October. The front-runner, Jair Bolsonaro is in a serious condition in hospital after being stabbed while campaigning.

In Q2 2018, Brazil’s unemployment remains stubbornly high at 12.4%, from 13.1% in Q1 2018 and 11.8% in Q4 2017, according to the IBGE. Nationwide unemployment rose to a five-year high of 12.7% in 2017, according to the government’s statistics agency IBGE.

Rents, rental yields: yields data is unavailable

Rio apartments costs are around $4,370 per sq. m. 

Brazil: city centre apartment, buying price, monthly rent (120 sq. m)
  Buying price Rate per month Yield
Sao Paulo $ 524,400 n.a. n.a.
Rio de Janeiro $ 709,200 n.a. n.a.

Recent news.  After a two-year recession, Brazil’s economic activity rose by 1% in 2017 from a year earlier, according to the Central Bank of Brazil. In Q3 2018, the economy expanded by 0.2% from the previous quarter and by 1% from a year earlier, despite a nationwide truckers’ strike, according to the government’s statistics agency, IBGE. However, the government recently lowered its growth forecast for 2018 to 1.6%, far below its earlier projection of a 2.5% growth before the protests.