Brazil Property: A Boom not a Bubble

Brazil is enjoying a property boom and its economy is burgeoning, and this has led to some concerns that it may be the beginning of a property bubble. However there would seem to be several good reasons why this is not the case.

Brazil is growing at a much quicker pace than it has done for over 30 years, and it’s the middle-classes who are taking out mortgages at a much faster rate than any time before. This is undoubtedly stoking the property market and causing prices to rise, but it should be remembered that many of these people have never had access to mortgages before. They are enjoying having the opportunity to buy their own home for the very first time, and the housing market is just trying to meet this demand.

Homes were being built at the rate of 100,000 to 200,000 units a year in the 90s, but this figure has grown dramatically to 800,000. It is thought this market still has a way to go as Mexico has a far smaller population but builds 800,000 units or more a year, so demand is currently outstripping supply.

The mortgage market in this country is still developing, and many people cannot get the financing to buy their own homes. This creates an ideal opening for the overseas investor who is likely to have access to easier funding. Not only will the property generate a good rental income, but will also have good resale opportunities into the local market at a later date as more and more people will wish to become home owners. This property boom will only be fuelled further by Brazil’s hosting of the 2014 FIFA World Cup and also the Olympic Games in 2016.

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