Demand for high-end property in Fortaleza has been booming since the start of the pandemic and some experts believe it has doubled. A change in lifestyle and record low interest rates are shifting market trends. And as a result, more and more buyers are opting for houses with higher quality finishes.
High-end market heating up
According to the civil construction industry union in Ceará (Sinduscon-CE), the luxury market in Fortaleza and surrounding metro area is heating up. Patriolino Dias, President of the association, believes the main cause lies in its potential for return.
“People were starting to return to the property market at the end of 2019,” he explained in an interview in O Povo broadsheet. “At the start of the year, many investors lost money on the stock exchange and aren’t making money from savings because of low interest rates.”
Dias believes that this is the main reason behind the heating up of high-end property in Fortaleza. Agents in the metro area agree and some claim that demand for this type of home has doubled since the start of the pandemic.
Shift in preferences
Up until the arrival of covid-19, the most sought-after properties tended to be compact apartments in Fortaleza city centre. In the light of lockdown, this preference has completely changed.
Families now want to live in townhouses or detached homes with private outdoor space. And preferably on the city outskirts or further afield in less urban areas. This has shifted focus to the higher end of the property market in Fortaleza. Industry analysts now refer to “repressed demand” during the pandemic that is now translating to sales.
Incentives to buy high-end property in Fortaleza
As well as a change in types of homes, buyers can now tap into low interest rates and favourable loan conditions. The Brazilian interest rate, known as Selic, dropped to 2.25% in July, its lowest ever. Until relatively recently, Brazilian homeowners were paying upwards of 14% interest on mortgages. The plummet in rates is therefore a breath of fresh air.
Brazilian Banks are also now offering better loan conditions. Loan-to-value amounts are higher and buyers have a better choice of types of mortgage.
Historically low interest rates have brought mortgages down to the same level as monthly rents. For many Brazilians, it no longer makes sense to rent a home when they can buy one and pay the same amount in mortgage repayments as they did for rent.
Property in Fortaleza has been in short supply for several years now and Sinduscon-CE point to another drop over the last few months. Pent-up demand is putting further pressure on inventory levels.
In the year to July, construction costs in Ceará rose by 2.3%. Analysts see the increase as an indication of the general heating up in the property market. This leads them to believe it augurs well for the rest of the year.
Brazil property prices rise
At the start of lockdown, some analysts believed that property prices in Brazil would fall on the back of a drop in demand. However, the latest figures released by Fipezap point to the opposite tendency. In the six months to June, house prices went up by 1.11% in the 50 largest cities in Brazil. This brings the average to R$7,294 per square metre.
(Source: O Povo, Diario do Nordeste)