May 2012 statistics and graphs (released mid-month) with information related to Brazil’s real estate and land industry by clicking on the link above – including the property price variation index, OECD composite leading indicators, inflation statistics, the SELIC interest rate, housing / private / commercial sector lending, percentage changes in construction costs, consumer spending levels, consumer / industrial / business confidence, real earnings and unemployment.
On the back of comments made by Capital Economics that Brazil’s property market is somewhere in between 30 and 50 percent over valued, the latest figures via Itaú BBA reporting on the performance of the country’s largest real estate developers have also showed generally negative results for quarter one of 2012 (bar Cyrela and Directional) – summarised on the Brazilian Bubble website.
The latest update from the most referred to index of Brazilian real estate asking prices – FipeZap – has indicated that there has been a further deceleration in April. After a phase of slowing down between April 2011 and January 2012, the index rose by 1.5 percent in February, 1.4 percent in March and 1.2 percent in April.
As well as exploring a range of issues related to Brazil’s global economic position, a recent conference held by the University of São Paulo Real Estate Centre saw some commentary made with regards to the current position of the country’s housing sector – some of the salient points of which have been highlighted in this post.
Brazil’s Gafisa real estate group has announced that it will be re-launching stock under its “Tenda” brand – marketing approximately 3,000 units in 2012 with an aggregated gross development value of between R$ 300 and R$ 400 million. Units are expected be sold at the next Caixa Econômica Federal fair (mid-May) at a minimum of R$ 94,000.
A recent report by the Curitiba news site “Gazeta do Povo” has pointed to a disproportionate number of new housing units being delivered with a range of problems including holes in masonry, badly completed painting, poor quality / uneven flooring, gutters problems, leaks and damaged doors. The developments have fallen under the scope of the Minha Casa, Minha Vida (“My House, My Life”) programme and have been valued at around the R$ 150,000 open market price range.
Brazil’s leading housing finance institution – the Caixa Econômica Federal – has recently announced that it will be reducing its interest rates under the Melhor Crédito (“Better Credit”) programme from 4th May 2012. For properties valued at up to R$ 500,000, the annual pay rate has dropped from 10 to 9 percent – with existing clients being able to access a reduced rate of 7.9 percent. For properties above R$ 500,000, the rate will drop from 11 to 10 percent – with a client rate of 9 percent.
Despite many of the leading agencies and developers already reporting drops in 2012 sales volumes, it is arguably still premature to affirm that the Brazilian house price crash is well underway considering the convoluted and inefficient data collection methodologies used to measure the market. Nevertheless, there continues to remain some who are adamant that no such event is occurring nor will happen in the foreseeable future. One of them is Claudio Bernandes, civil engineer and president of the São Paulo Housing Union (Secovi-SP) whose comments made in the Folha newspaper were compiled on the Capital Social site besides the contrasting views of William Eid Júnior, finance professor at the Getúlio Vargas Foundation.
April 2012 statistics and graphs (released mid-month) with information related to Brazil’s real estate and land industry by clicking on the link above – including the property price variation index, OECD composite leading indicators, inflation statistics, the SELIC interest rate, housing / private / commercial sector lending, percentage changes in construction costs, consumer spending levels, consumer / industrial / business confidence, real earnings and unemployment.
Whilst long term expectations continue to remain positive for Brazilian real estate companies, the globally leading banking institution Credit Suisse has recently recommended that investors take some caution – stating (in a client note published in São Paulo’s Estadão newspaper): “values appear attractive, but the lack of visibility over finances bring a cautionary vision towards the sector in the short term.”
