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The Solid Construction of the Brazilian Real Estate Marketa

Friday, 03rd October 2008

The Brazilian real estate market has experienced massive development over the past few years, with a record number of constructions, sales, and financing. This growth has not been restricted to big cities such as São Paulo, Rio de Janeiro, or Belo Horizonte, but instead has spread all over the country. Although some might consider such growth to be a significant risk for a mortgage bubble, similar to what has happened in the United States, the truth is that the situation is quite different in Brazil. Considering the positive perspectives for 2008, one could expect that the country will undergo a long growth period in this market.

The growth of the Brazilian real estate market has occurred due to a number of factors. Apart from the economic stability and inflation control that has lasted for over a decade, the drop in interest rates and the extension of financial loans for housing should also be highlighted. Until 2005, the Brazilian housing loan interest rates were approximately 13% per year; in 2007, several banking institutions were already offering credit loans with interest rates of only 8%. As for the lending time periods, while in 2006 the maximum time was fifteen years, today, it has been increased to thirty years. Lower interest rates and longer payment periods have resulted in a considerable reduction of installment values, enabling a huge consumer market range to acquire property.

Source: Brazilian-American Chamber of Commerce  

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