New properties in Brazil are currently experiencing their best ever year for sales. The market has seen significant hikes in transactions throughout the country as buyers take advantage of low interest rates. Mortgage lending has also risen sharply in tandem with the big increase in sales. As a result, analysts are predicting a record year for the Brazilian property market.
Sharp rise in sales
The Brazilian Chamber of Construction Industry (CBIC) has just released sales figures for new properties in Brazil for the first nine months of the year. The report found that purchases of new apartments went up by 8.4% between January and September. This represents an 8.4% increase on the same period in 2019.
The figures for Q3 are even more impressive. Between June and September, 54,307 new properties exchanged hands in Brazil, an uptick of 23.7% compared to Q3 2019.
A home more important than ever
One of the reasons behind the big rise in sales of new properties in Brazil lies in the pandemic and lockdown. The home has become a symbol of security and quality of life. And as a result, more Brazilians than ever are looking to upgrade their home by moving to a larger or higher quality property.
“The pandemic has brought with it a higher appreciation of the home and family,” said José Carlos Martins, President of CBIC. “This heightened sense of well-being is the main reason behind the heating up of the market,” he explained.
Leap in mortgage lending
The second reason for the high increase in sales lies in the lowest ever interest rates in history. The SELIC currently stands at 2% and the Brazilian Central Bank has just announced that it will remain at this level for the rest of 2020.
Mortgages are therefore also at record lows, a situation reflected in the sharp rise in loans. New lending reached the total of R$12.91 billion in September, up by 10.2% on August. The year-on-year increase was a massive 70.1%. The monthly total is the highest on record (since July 1994).
The latest consumer survey shows that there’s no sign of a drop in demand for new properties in Brazil. The percentage of those intending to buy went up by 15% in October bringing the total to 46%. Of these, 13% are actively looking.
This puts further pressure on supply already feeling the effects of strong demand this year. According to CBIC, new-build inventory levels fell by 13% between January and September due to the rise in sales. Launches of new projects also dropped because of lockdown.
Prospects for 2021
The figures for the first nine months of this year and continued strong demand lead analysts to believe that sales of new build properties in Brazil will go up by 15% this year. This will be the highest increase on record.
It also means they are predicting growth in 2021 as well. “We believe that we can transfer these positive expectations to 2021,” said Celso Petrucci, Vice-President of CBIC. “All in all, we expect an increase in sales next year as well.”
Invest in new properties in Brazil
One of the sectors attracting considerable attention from buyers this year in Brazil is luxury property. Interest comes from two markets. Pent-up demand among Brazilians themselves is the primary source with foreign buyers coming a close second. The drop in the Brazilian Real this year has made property in the country considerably cheaper for investors.
The Coral resort in Northeast Brazil, owned and developed by BRIC Group, has seen a rise in interest this year in line with the new trends in the market. The beach resort offers high-end property including villas and duplex apartments. Buy-to-let is one of the main investment options that start at R$425,000 (US$75,500/ €63,750). Find out more.