A record for new-build Brazilian real estate in 2023

A record for new-build Brazilian real estate in 2023

The latest figures for the new-build Brazilian real estate market confirm that sales registered record levels last year, with mid to high-end homes experiencing one of the biggest upticks in sales values.

Best year ever for sales

Data from the Brazilian Association of Property Developers (ABRAINC) and FIPE, the Institute for Economic Research, reveals that Brazilian real estate enjoyed a record year for sales last year.

According to figures from the 20 largest construction and development companies, sales of new-build properties increased by 32.6% in 2023 compared to 2022. The result is the highest since records began in 2014.

In addition, sales values soared, with an uptick of 34.7%. The total transaction value for new-build Brazilian real estate reached R$47.9 billion last year. According to the Brazilian Mortgage Association (ABECIP), the figure demonstrates that developers are investing more in properties at the higher end of the market.

In line with other data

The latest data broadly concurs with figures released earlier in the year from the Brazilian Chamber of Construction (CBIC). Their statistics cover 220 cities in the country and show total sales (new-build and resale properties) of around 322,800 units.

In Sao Paulo, Brazil’s largest property market, sales grew by 10% in 2023 and reached 76,100 units.

Fewer launches in 2023

2023 saw fewer new developments enter the market than in 2022, with 118,000 units less. The mid to high-end sector experienced the most significant decrease, while social housing within the Minha Casa Minha Vida programme registered 16.7% more units.

The drop in high-end launches comes from companies taking the decision to gradually reduce their inventories. “This was the right decision,” said Luiz Franca, President of ABRAINC, “because we’re now seeing more inventory growth within this sector to the extent that sales have increased.”

Supply levels of high-end Brazilian real estate currently stand at 17 months. Franca believes this level is appropriate given market demand.

New-build Brazilian real estate in 2024

The 2023 figures lead analysts to predict another strong year for the market. Franca points to an increase in both sales and launches in 2024 because “the prospects are very positive”.

Interest rates are forecast to continue their downward trend throughout the year, widening purchasing power for future homebuyers. “Single-digit rates will attract many more people to the market,” said Franca, “and drive a wave of buyers from the middle class.”

Franca’s expectations are in line with those from ABECIP for 2024. The Association forecasts the best year ever for mortgage loans in Brazil, exceeding even figures for 2022.