The heated housing market in cities like Sao Paulo and Rio raises concerns that there is a potential ‘housing bubble’ in Brazil.
Is it really possible that prices could fall suddenly and burst the “bubble”?
Brazilian “experts” dismiss the hypothesis, but an American economist who predicted the US housing bubble in the United States finds worrisome that property prices have doubled in the last five years in Brazil’s largest cities.
“One can’t know for sure, but I suspect that there is a housing bubble in the major cities of Brazil,” said economist Robert Shiller, professor at Yale University and who predicted the U.S. housing bubble.
‘The fact that prices have doubled in the last five years does not sound good. If prices fall, this can create problems,” said Shiller.
He argues that in the United States, the possibility of falling home prices was regarded as unthinkable – and yet, that’s what happened with the 2008 crisis, causing many homeowners’ assets to depreciate. In many cases, mortgages now exceed the value of the property.