Is this a good time to buy real estate in Brazil? Finance professor at the FGV-SP School of Economics, Samy Dana, is categorical in stating that “this is the worst time to buy a property.”
He said the high prices are unable to be sustained. I am convinced that there is a housing bubble. The prices are absurd. The square meter in good regions of São Paulo can cost between R$10,000 and R$12,000. According to Dana, Jardins is among the most expensive regions in São Paulo, where a 100 square meter apartment costs on average R$1million.
The math is simple
“The investment rate of return is very low. According to information listed on real estate sites, this ratio (monthly rental divided by property price) is close to 0.35% in several regions. So if the CDI (the Brazilian risk-free asset) pays 0.90% (September rates) and the savings (which has the lowest return rates in Brazil) pays 0.5% (plus TR), why would a rational buyer invest in a market with significant risks and low liquidity, such as real estate?“, asked the expert.

The World Cup fallacy
The confirmation of Brazil to host the 2014 World Cup also contributes to the heating of the housing market. But to what extent this increase is sustainable? “People expect that the World Cup will be a miracle for real estate. But it will not. Brazil still has many structural problems,” he says.
“I think prices should start falling soon. The country looks like a huge construction site and when all developments are ready, there will be an increase in supply and prices will fall. Moreover, if Europe is to break, some European banks will break along , the global recession will build steam and push prices down even further“, he bets.
Source: Isto E Dinheiro 

Share →