In Sao Paulo, house prices were up slightly by 0.21% y-o-y in Q3 2020

Brazil’s housing market remains fragile with house prices in Sao Paulo rising by a minuscule 0.21% during the year to Q3 2020, following annual growth of 0.31% in Q2, declines of 1.01% in Q1 2020, 1.96% in Q4 2019, 0.88% in Q3, 1.29% in Q2 and 2.41% in Q1. On a quarterly basis, house prices in Sao Paulo were almost unchanged in Q3.


Demand is improving while supply is plunging

Demand is rising thanks to historic-low interest rates, after slumping due to the COVID-19 pandemic. In July 2020, Sao Paulo State Housing Union (Secovi-SP) recorded 4,341 new residential units sold in the city of Sao Paulo, up by 32.3% from a year earlier. Coronavirus-related restrictions have caused residential launches in São Paulo to plummet 44.4% y-o-y, in sharp contrast to huge annual rise of 49.6% in 2019, according Secovi-SP.

The corruption scandals faced by former presidents Dilma Rousseff and Michel Temer, which caused prolonged political crisis in Brazil, helped right-wing candidate and retired army officer Jair Bolsonaro sweep to victory during the October 2018 presidential election. But more than a year into his presidency, Congress has been blocking most of his plans. 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.

Now, the country is in a fierce political battle over the COVID-19 pandemic, with Bolsonaro urging state governors to lift preventive lockdowns arguing that the economic damage far outweighs the public health risks. Brazil, by some measures, is the new epicentre of the outbreak, registering higher daily averages than in any other part of the world.  Yet the central bank has reduced interest rates to rescue the economy. As always that tends to mean higher property prices – and that’s what is happening in Brazil.

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
Sao Paulo     $524,400 $1,000 5%-6%
Rio de Janeiro $709,200 $1,200  3%-4%

Recent news. In 2019, the Brazilian economy grew by 1.1% from a year earlier, following expansions of 1.3% in both 2017 and 2018 and declines of 3.3% in 2016 and 3.6% in 2015. Due to the pandemic, Brazil is projected to contract by 4.7% this year, the country’s biggest decline in more than a century, according to government estimates.

In an effort to buoy the economy, the Central Bank of Brazil has slashed its benchmark Selic rate by another 25 basis points to a new all-time low of 2% in August 2020, the fifth consecutive rate cut this year.