Here is a piece of Banco Safra’s report on home affordability in Brazil, posted on Housing Market BR:
Fact: There has been a prominent downsizing in new homes launched by Brazilian homebuilders.
Although on a price/square meter ratio, prices have skyrocketed in recent years, with the average unit launched in the city of SP in 7M11 priced at R$6,200/sqm vs. R$3,458 in 2006, the average price of launched units has risen at a much slower pace, and stood at R$473,000 (vs. R$392,000 in 2006). The caveat is that consumers are paying roughly the same price today (in real terms) for a house that is 32% smaller than what this amount could purchase in 2006 (76 vs. 113 square meters).
By selling smaller, farther-away homes with 30-year installment plans, homebuilders have managed to couple with the rising costs of land and labor while keeping profitability. At the same time, the first home has become affordable to an increasing number of Brazilian families. In a country with such a pent-up demand for homes as Brazil, it comes as no surprise that most people’s new homes are the ones that fit their budgets, not necessarily the one that the average family would desire in terms of size and location. However, the downward trend in unit size has a limit – as shown by the relative stability seen in 7M11 vs. 2010 –, and it will be harder for builders to push even smaller homes for customers from now on.
Original article here.