The Real Estate Bubble in Brazil

Since 2009, Brazilian real estate price increased by almost + 209%.

The Rise in Prices Keep on Growing

Brazil, also known as the largest country of Latin America sees its real estate price increase of + 9.10% over the last 15 months and + 0.46% on January.

The Number of Loans Granted Explode

Thus, the total amount of the loans granted by the banks to the Brazilians rose by $ 879 million in 2005 (at the current exchange rate) to $ 53.2 billion in 2014 according to the Central Bank.

Brazil has also experienced a strong economic expansion. In fact, in the past few years, there are nearly 38 million people who joined the middle class. With better income that part of the population has gained access to loans for the first time in their life. As a consequence, the real estate demand “compressed” for so many years has exploded while the high interest rates drastically dropped.

Population Growth

beaches in rio de janeiroThe demographic growth of Brazil is also another factor determining the recent developments in the real estate prices. The population is expected to increase to 78 million homes in 2021, with an average of a million weddings per year (for 240 000 divorces) and an important increase in the national life expectancy.

A National Program of Housing Construction

In Brazil, president Lula launched several months ago a program aiming to build a million new homes for the new middle class Brazilians.

The Experts’ Opinion

According to the socioeconomic experts it is only a matter of time for the prices will go even further down. By how much and when they still don’t know but it will happen. Furthermore, several magazine specialized about economy also consider that the growth of the Brazilian real estate market has been very intense and fast and therefore presents with the characteristics of a real estate bubble. According to other experts Brazil is currently facing a real estate bubble because the prices are already high, but people continue to buy because they fear that they will keep on increasing, which is the logic of a real estate bubble.

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