Mid to high-end property dominates Brazilian real estate market

Mid to high-end property dominates Brazilian real estate market

Recent shifts in living trends have placed the focus on the higher end of the price scale and as a result, mid to high-end property dominates the Brazilian real estate market. In Sao Paulo, home to the country’s largest market, this type of home now represents more than half of all launches. Similar trends are appearing throughout Brazil.

Mid to high-end property represent 60% of launches

The ever-increasing demand for properties at the upper end of the quality scale is most apparent in figures for launches. In April in Sao Paulo, mid to high-end homes represented 59% of all new property launches. The figure is 3% higher than in 2021 and analysts believe it could increase still further.

“There’s pent-up demand among the middle and upper classes,” said Celso Petrucci, Chief Economist at Secovi-SP, the city’s property union. The Secovi-SP President, Ely Wertheim agrees.

Record launches in year to April

Brazil’s financial capital has experienced a surge in the real estate market over the last 18 months and has just posted a record number of launches. In the year to April, they totalled over 85,000.

Sao Paulo has therefore beaten its previous historic high, registered in 2021. Last year, some 81,800 new units entered the market.

The new record for the 12 months to April surprised analysts slightly because of higher building costs and mortgage interest rates. “However, more expensive properties are a market that absorbs increases in prices better,” said Wertheim.

For his part, Petrucci forecasts a continuation of this demand throughout the rest of the year with a slight slowdown towards 2022.

Strong sales in May

In tandem with mid to high-end property dominating the Brazilian real estate market goes a surge in sales in Sao Paulo. There were 6,838 transactions of new homes in May, an increase of 16.2% on the same month last year. Over the last 12 months, sales have risen by 14.9% in the city.

The rate of sales has, however, slower slightly. According to Secovi-SP, it now stands at 53.7%, down from 57.8% a year ago. The rate is calculated based on the total sales compared to supply.

The rest of Brazil mirrors Sao Paulo

The latest figures for the city illustrate the temperature of the Brazilian real estate market. Despite the headwinds of more expensive mortgages and rising inflation, demand continues to increase.

Northeast Brazil is a case in point. In this region, a recent survey revealed that 40% of consumers are looking to buy property. The national average stands at 35%. And in May, mortgage loans registered their second-best figures for this month ever.

(Source: Secovi-SP)