By Ana D’Angelo (via Correio Braziliense).
The boom in property prices, which rose by as much as 30% per year until mid-2011 throughout Brazil, has finally come to an end. Sales have dropped and the market now carries an oversupply of properties, giving consumers the chance to get average discounts of 20% over the original price. A tip from experts to home buyers: do not accept the first offer. Search, compare, and demand discounts. With high inventory levels, Brazilian home builders are already convinced that it is better to sell for less than maintain unsold properties. No wonder all homebuilders are already launching less projects.
It’s definitely a buyer’s market. In addition to the homebuilder’s high inventories, individuals who bought apartments at the plant (before construction) to speculate on the future sale after the property became ready, have already realized that the boom times are over. As they receive the keys to their newly finished units, many investors are accepting to sell their properties, which were acquired three years ago, for a value only slightly higher or even equal to what was paid originally.
As an idea of how the market has changed lately, home sales in 2010 took an average of 90 days to close while now they take at least six months, said property broker Armin Reinehr Neto from Creci-DF. This is the reason, says economic institute FIPE, that price increases on finished properties lost ground. According to many brokers, the deals are almost always closing for lower than the original prices, especially when the buyer pays in cash.
“Prices are still rising on average, although at a much slower pace. But we no longer see the euphoria of recent years,” said the economist Eduardo Zylberstajn, coordinator of Fipe’s property index. He said the greed seen before is no longer there.
Claudio Tavares de Alencar, a professor at the University of Sao Paulo (USP), says the tendency is that prices stabilize this year. “The valuations were too high. It looked like a bubble but the market took a pause for now,” he said.
“As wages did not follow property prices, many buyers are waiting or settling for less,” says Secovi-SP’s Emilio Kallas.
Depending on the neighborhood, however, it is possible to find properties priced for less than than they were a year ago. This is happening due to high inventories and, mainly, because the public homebuilders are being pressured by the markets to raise cash.
Source: Correio Braziliense