In Sao Paulo, real house prices were down 2.45% during the year to Q3 2022

Brazil's high inflation makes it appear that house prices continue to rise. But it's an illusion. In Sao Paulo, real house prices fell by 2.45% during the year to Q3 2022, following y-o-y declines of 6.77% in Q2 2022, 6.39% in Q1 2022, 5.39% in Q4 2021, and 5.51% in Q3 2021. Though on a quarterly basis, Sao Paulo prices rose by 2.55% during the latest quarter.

Inflation-adjusted house prices in the capital city have been falling since 2015, and the rate of decline has intensified again since the Covid-19 pandemic. 

 

Demand rising, but sociopolitical unrest continues

During the twelve-month period ending September, the total number of new residential units sold in the city of Sao Paulo reached 69,812 units, up 6.3% from a year earlier, according to Sao Paulo State Housing Union (Secovi-SP).

But sociopolitical unrest continues. During the onset of the pandemic, President Jair Bolsonaro had been widely criticized for his handling of the health crisis, refusing to support measures to halt the spread of the virus. In July 2021, tens of thousands of people have taken to the streets to protest amidst the recent allegations of corruption involving the purchase of vaccines by the government. In fact in October 2021, a Senate investigative committee found that Bolsonaro committed nine crimes related to his administration’s handling of the health crisis, amidst delayed vaccines, oxygen shortages and ineffective treatments. 

With the incumbent president’s poor approval ratings leading to the October 2022 general elections, it is not surprising that he lost to leftist rival, ex-president Luiz Inácio Lula da Silva, who is due to be inaugurated as president on January 1, 2023. However in November 2022, Bolsonaro filed a petition with the country’s election authorities formally contesting the results of this year’s fiercely contested general elections.

Rents, rental yields: rental yields are moderate ranging from 2.76% to 9.85%

Brazil: typical city centre apartment buying price, monthly rent (2-BR apartments)
	Buying price	Rate per month	Yield
Sao Paulo	$144,495	$578	4.8%
Rio de Janeiro	$169,614	$604	4.3%

Recent news. Brazil’s economy expanded by 3.6% y-o-y in Q3 2022, following annual growth of 3.7% in Q2 and 2.4% in Q1, according to the Instituto Brasileiro de Geografia e Estatística (IBGE). It was the seventh consecutive quarter of y-o-y growth.

The Brazilian economy is projected to expand by 2.8% this year, a slowdown from its 2021 growth of 4.6%.

In December 2022, the Central Bank of Brazil left its benchmark Selic rate at 13.75%, after raising it five times since February this year, in an effort to rein in inflationary pressures. The key rate is now at its highest since November 2016. Inflation slowed to 5.97% in November 2022, after reaching a 19-year peak of 12.47% in April 2022.