In Sao Paulo, house prices were down 1.73% during the year to Q1 2021

Brazil’s housing market remains fragile, with house prices in Sao Paulo falling by 1.73% during the year to Q1 2021, following a y-o-y decline of 1.01% last year. On a quarterly basis, house prices in Sao Paulo fell by 0.79% in Q1 2021. 

House prices in the capital city have been falling since 2015, though the rate of decline has moderated in recent years. 

Demand rising, supply falling

During Q4 2020, 6.7% more residential units were sold in Brazil than last year, to a total of 58,000, according to Sao Paulo State Housing Union (Secovi-SP). On the other hand, residential construction activity remains weak, with the number of launches falling by 7.1% y-o-y to 61,300 units in Q4 2020.

Retired army officer Jair Bolsonaro sweep to victory during the October 2018 presidential election. In November 2019, Bolsonaro launched a new political party, the Alliance for Brazil (APB), and the political situation remains heated.  Bolsonaro has been widely criticized for his handling of the COVID-19 pandemic, refusing to support measures to halt the spread of the virus. Brazil has seen the second-highest coronavirus death toll in the world, with more than 440,000 fatalities, and a Senate commission is currently investigating his administration’s handling of the health crisis, amidst delayed vaccines, oxygen shortages and ineffective treatments.

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 2020, the Brazilian economy contracted by 4.1% from a year earlier, the biggest annual decline in activity since 1990. In March 2021, the IBC-Br Economic Activity Index of the central bank, a leading indicator of GDP, fell by 3.37% from a year earlier – an indication that the economy continues to suffer as fresh coronavirus waves showed no sign of abating despite the rollout of vaccines in many countries.

The economy is projected to expand by 3.2% this year, according to government estimates, leaving it still below its pre-pandemic level.

In May 2021, the Central Bank of Brazil raised its benchmark Selic rate by 75 basis points to 3.5%, its second consecutive rate hikes this year in an effort to rein in inflationary pressures despite the slower-than-expected economic recovery.