And the reader may ask us: is this blog officially calling it the Brazil real estate peak this last November? Although we are inclined to say yes, it would not be wise to do so as no one can predict it accurately. Considering that the Brazilian government is “opening the tap” to keep the credit flowing and avoid an economic hard landing, the real estate bubble may keep inflating for another year before it bursts.

According to Fipe’s research (via Zap and Estadao), rising housing prices softened in November, recording the lowest pace in price gains since early 2010.The survey released today shows that the average price per square meter in seven metropolitan areas rose 1.4% in November, lower than the 1.6% from October and well below the peak of 2.7% recorded in April. The lowest high in 15 months was observed in all seven regions surveyed and reflects the slowdown in the Brazilian economy and its effects on consumers. 

“The scenario of increased uncertainty is causing buyers to become more cautious,” says Zylberstajn (Fipe’s director), citing the drop in the pace of job creation and inflationary pressure on wages. Still, he says, the rise in house prices is significant. 

Between January and November the average price per square meter rose 25%, while in the last 12 months ending in November the increase was 27.6%. The Federal District (Brasilia) continues to be the most expensive square meter of the country (R$7.936), followed by Rio (R$7.341), São Paulo (R$5.984), Belo Horizonte (R$4.584), Recife(R$4.559), Fortaleza (R$4.253) and Salvador (R$3.514). In Sao Paulo, the monthly increase of 1.7% was the lowest since July 2010. The regions of Ibirapuera and Vila Nova Conceicao are the most expensive, with average price per square meter of R$9.354.

Rio and Recife had the highest increases in the last 12 months, rising 37% and 29%, respectively. In Rio, the average price per square meter in Leblon, the city’s most expensive neighborhood, passed the R$17,000 mark for the first time. Ipanema is the second most expensive, at R$15,000 per square meter.For next year, the deceleration trend of house prices should remain in the first half, says Zylberstajn.
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