Buyers are lining up to buy properties, pent up demand is now being fueled by “low cost” (by historical standards in Brazil)
The BBC reports that
Off-plan Properties that are up for sale but will not being delivered for two years are being snapped by by eager buyers and competition for the best spots is intense.
When a customer decides to buy, the estate agent has to rush through all the relevant the documents before a competitor closes the deal.
“Last night I didn’t have any sleep because we spent all night closing deals,” says sales supervisor Thiago Davidian.
“My team sold more than 50 units yesterday and more are going as we speak.”
Emerging mortgage market
Estate agent Thiago Davian is doing all he can to cash in on Brazil’s property boom “It’s great to be working with real estate in Brazil at the moment,” he grins.
Cocktail parties, with dozens of real state agents pitching their best offers, have become frequent events in big Brazilian cities in recent months.
It has all come about because of a sharp drop in mortgage rates, which fell to single-digit figures last year.
Before then, the Brazilian mortgage market had been embryonic at best as interest rates in the country have historically been among the highest in the world.
In recent months, a particularly healthy mortgage market has emerged. Mortgage lending rose to a whopping 23.8bn reais ($13.6bn; £8.9bn) during the first half of this year, a 77% rise when compared with the same period a year ago.
Embraesp, a real estate research company states that “The rise in demand has resulted in a doubling in the price per square meter in Sao Paulo”
The construction industry has grown by 15% during the first half of 2010 when compared with the same period a year earlier, and thus outpacing the 9% overall economic growth rate (GDP).
Owning a house and a car is a dream for many Brazilians “We have carefully studied what happened in this international property bubble,” says Joao Crestana, president of Secovi-SP, Brazil’s real estate developers’ association.
“We must not make the same mistakes as the United States and Spain did.”
Developers in Brazil insist banking regulations here are much tighter than they were in the US and say the debt burden here is not as large.
“Here in Brazil, the average loan to value is 60%,” Mr Crestana
Commentors say that properties in Brazil are bought mainly as homes rather than as investments.
”In Brazil there are eight million families who do not have a house to live in,” says Mr Crestana.
“That means 30 million people, equivalent to the whole population of Argentina, who do not have a house. “So on the demand side we have nothing to worry about for the next 15 years at least,” he insists, pointing to how economic growth in Brazil has elevated some 30 million people into the country’s “lower middle class”. “And now they want their own homes,” he says.