Brazil's 2016-2017 economic recession hit hard across all sectors, including the housing market. But lately things have been on the uptick, and the real estate market in São Paulo seems to be leading the way to recovery.
According to Eduardo Zylberstajn, the head of research at the Institute of Economic Research Foundation (FIPE), home prices in São Paulo fell approximately 15 percent since their 2014 peak. Interest rates increased to an unfavorable 14 percent, and banks were issuing less credit to home buyers. This summer, however, the interest rate dropped to a slim 6 percent, which has stimulated home sales.
The luxury housing market lapsed significantly during the recession, while the government focused on stimulating the construction of smaller units at economical prices during the crisis. Recently, it has been on the rebound with luxury units in São Paulo seeing a 32 percent increase from June 2018 to June 2019. This brings the sector closer to 2012-2013 pre-recession numbers.
Some of São Paulo's best neighborhoods, like Itaim Bibi, Jardim Paulista, Vila Olímpia, Pinheiros and Vila Madalena, have average prices of about USD$371 per square foot. Luxury properties in these areas cost between USD$650-USD$1,860 per square foot. In July of this year, the average São Paulo home price was about USD$200 per square foot.
The majority of luxury buyers are Brazilian (roughly 88 percent), though the number of foreigners buying property has been increasing. Foreigners do need to be careful, however, as there are restrictions on who can buy properties in both coastal and rural areas, for example. Also important to keep in mind is that there is still an emphasis on paperwork and documentation. Both sellers and buyers, Brazilians and foreigners alike, need to present everything from documents of identification to marriage certificates, powers of attorney and tax identification numbers.
Getting good news from the real estate market is a welcome relief after years of a struggling economy. The hope is that the housing trend is a positive sign of more to come for Brazil.