Experts are predicting 10-15 percent growth in residential property prices in Brazil this year, but with little risk of a bubble. Of the 15 research groups, business associations and banks polled by Reuters, most believe there is little risk of a downturn due to continued affordability and improvement in salaries.
The middle class in Brazil is expanding fast with many planning to buy their own homes for the first time, even though prices have nearly doubled in certain neighbourhoods.
In São Paulo, Brazil’s largest city the average property grew in value by 85% between April 2009 and October 2011 to $3,250 per square metre, although growth is expected to slow somewhat as the Brazilian economy cools.
During the same period consumer inflation increased by nearly 15%, but is expected to remain at about 5.5% during 2012.
Even though Brazilian property prices have increased spectacularly over the last few years, experts don’t feel there is any risk of a large price correction. This is because property prices were extremely low during the 80s and 90s when Brazil was struggling with low growth rates, hyperinflation and only modest credit expansion. And because the majority of Brazilians are buying property in which to live in rather than as a vehicle from which to make money.