A recent survey has revealed that Northeast Brazil has the highest demand for homes and most significant shortage in the country. The percentage of people looking to buy property in Northeast Brazil is considerably higher than the national average while the region’s housing deficit represents almost 30%.
40% of consumers looking to buy
The survey carried out by the Association of Brazilian Real Estate Agents (ABRAINC) found that four out of every ten people in Northeast Brazil want to buy property. The proportion is higher than the national average, which currently stands at 35%.
Those interviewed cited three reasons to buy. Investment purposes were the primary motivator, while others wanted to leave their rental homes or buy a new house.
However, only 22% plan to buy property in Northeast Brazil in the next year, and among them, just 2% intend to purchase in the next six months.
Preference for apartments
The majority of those interviewed for the survey expressed a preference for apartments, with nearly half (47%) opting for this type of property. Villas and houses were the next favourite and 41% said they would be buying a single-family home. Just 11% are looking for a plot of land in Northeast Brazil.
Shortage of property in Northeast Brazil
However, the regional property market has low inventory levels despite high demand. Lack of supply is an acute problem in the region that currently represents 27% of the housing deficit in Brazil.
According to the statistical foundation, Fundaçao Getulio Vargas, 3.2 million households will be looking for housing over the next eight years. This demand is well ahead of supply. For example, between 2016 and 2021, just 110,000 new units were launched in Northeast Brazil.
New projects on the horizon
The pandemic has done little to improve the situation, although developers are attempting to rectify it. “Inventory levels have gone down throughout Brazil, but new projects are now being launched,” said Patriolino Dias de Sousa, President of the Civil Construction Industry in Ceará (Sinduscon-CE).
He also points out that there’s substantial pent-up demand at all price entry levels. However, the highest lies in the upper echelons of the market.
Eldair Melo from the Ceará Economic Council (Corecon-CE) agrees. “The sector received a significant boost from launches of high-end properties, which registered the highest growth,” he said.
The moment to buy
Investment prospects are another factor driving demand for property in Northeast Brazil. In addition, analysts underline the fact that real estate offers a safe bet against inflation.
Although Brazil’s official SELIC interest rate currently sits at 12.75%, bank lending rates are lower. According to Melo, the main banks in Brazil have mortgage interest rates of around 10.24%. “This presents an opportunity to invest in property,” he said.