In Sao Paulo, real house prices were down 6.39% during the year to Q1 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 6.39% during the year to Q1 2022, following y-o-y declines of 5.39% in Q4 2021, 5.51% in Q3 and 3.63% in Q2. In fact, it was the biggest y-o-y fall seen since Q3 2016. On a quarterly basis, Sao Paulo prices fell by 1.84% during the latest quarter.

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 continues to rise, but sociopolitical unrest continues

During the twelve-month period ending March 2022, the total number of new residential units sold in the city of Sao Paulo was up 22.3% from a year earlier, to 67,248 units, according to Sao Paulo State Housing Union (Secovi-SP).

President Jair Bolsonaro has been widely criticized for his handling of the health crisis. There have been allegations of government corruption involving the purchase of vaccines, substantiated by an October 2021 Senate investigative committee. With the general elections due to be held in October 2022, the president’s ratings have slipped below 20% with ex-president Luiz Inácio Lula da Silva leading the opinion polls by a massive margin.

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 May 2022, the Central Bank of Brazil raised its benchmark Selic rate by 100 basis points to 11.75%, its tenth consecutive rate hike since March 2021 in an effort to rein in inflationary pressures. The key rate is now at its highest since February 2017. Inflation reached 12.13% in April 2022, its highest since October 2003.

Brazil’s economic growth is projected to slow to 1%, based on the central bank’s projections, as consumer sentiment has turned more pessimistic and business sentiment has dropped into negative territory amidst the ongoing sociopolitical tension ahead of the elections. These growth projections are a sharp slowdown from 2021’s 4.6% economic growth.