As the new year gets underway, analysts are busy predicting trends in the Brazil property market in 2023. In a nutshell, they expect four main tendencies: civil construction to continue its upward trajectory, a steadier inflation rate to maintain the value of Brazilian real estate, lower interest rates and shared ownership to become more relevant this year.
These four trends form part of an ImobiReport published at the beginning of this year, based on expert opinions for key players in the Brazilian property market. In this article, we summarise the main points.
More launches of new property
For Luiz França, President of the Association of Brazilian Property Developers (ABRAINC), property development will continue to perform well this year. He highlights the gradual improvement in the economy, lower construction costs and higher purchasing powers as the three main drivers of the construction sector.
He believes that this scenario will lead to more launches of new properties over the next few months. In turn, this expectation boosts confidence in the market and augurs good prospects for the Brazil property market in 2023.
According to an ABRAINC survey in late 2022, 62% of real estate businesses believe the market will be better or much better in 2023 than over the last few years.
Lower interest rates
In common with many countries, Brazil raised its interest rates in 2022. The Selic remained steady at 13.75% in the second half of the year and analysts predict this rate to remain in place for at least the next six months.
A Reuters poll at the end of December predicted a rate of 13% for Q3 and a further fall to 11.5% by the end of this year. The slight drop in the Selic will benefit the Brazil property market in 2023.
High-end property sales to increase
Buyers with higher purchasing power tend to buy in cash or take out short-term loans for just a few years. As a result, higher mortgage interest rates have little effect on this sector.
Luxury property sales fared well in Brazil during 2022 on the back of demand for higher quality homes with more space and communal facilities. Analysts expect the top end of the market to continue to boom during 2023, particularly as new launches incorporate the latest technology in design and architecture.
More demand for equity release
More expensive interest rates lead to an increase in homeowners looking at equity release. This option allows them to borrow money to finance other projects including the purchase of a second home.
Data from the Brazilian Mortgage Association (ABECIP) shows that demand for this type of loan in Brazil went up by 36% in 2022, compared to 2020.
New foreign investment in Brazil
The Director of Development for Gafisa, one of Brazil’s largest property developers, believes that lower construction prices will lead to new foreign investment. Fred Kessler bases his prediction on Brazil’s good relations with other countries. He also cites the recent change of government and the expectation of new incentives for property loans as a reason for more external investment in Brazilian real estate.
More shared ownership
The Brazilian property market has embraced shared ownership over the last few years and as a result, this model has significantly increased its market share. The latest data reveals that the number of shared ownership projects in Brazil has grown by 24% every year since 2018.
Analysts believe this trend is here to stay and will continue to expand during 2023.
Analysts are unanimous in their optimism for the Brazil property market in 2023. In the words of Aurelio Capua, President of the regional Association of Brokers in Espiritu Santo (CRECI-ES), “everything points to a favourable year for the real estate market”. He adds that the sector shows great promise for those looking to invest and expand their portfolio.
Brazil property market in 2022
The latest statistics from ABRAINC reveal the following data for 2022.
· Sales of new units from January to September – 122,738, up 12.9% on the same period in 2021 and the highest ever for the first nine months of the year.
· Buyers with mid-to-high purchasing power – sales to this buyer profile rose by 84.3% between January and September. The 35,193 sales represented 29.2% of the total in Brazil.
· Completion of new developments – some 64,000 units were delivered in the first nine months of last year, 19% more than in 2021.
· Prices for new property in Brazil – up 10.3% in Q3 2022.
(Source: ABRAINC, ImobiReport)