Is the Brazilian real estate market on the verge of collapse?

[totallyproperty]

There are two very different trains of thought with regards to the Brazilian real estate market with some suggesting it will remain steady during 2014 while others believe we are on the verge of a significant fall. Some people are also suggesting that the Brazilian economy is struggling and after relatively good performance over the last few years could be about to hit a difficult patch.

What is your view on the Brazilian real estate market?

 

[Allumjo]

The currency is struggling and the policies by the current government have not been great. I believe there is an election towards the end of this year so it will be interesting to see what develops.

 

[totallyproperty]

It is interesting to see that the Brazilian economy is struggling, as are some other economies in the region, especially in light of the array of new trade agreements which have been agreed over the last few years. Personally I think Brazil could offer good value in the long term although I think we may see a shakeout in the real estate market in the short-term.

I have seen a number of experts suggesting that prices have pushed too far ahead of household incomes and there is also the issue of consumer debt which has ballooned over the last few years. This is a natural cycle in the development of an economy such as Brazil which has struggled in years gone by but now seems to be on a more even keel even though it may be standing on the verge of a cyclical downturn in the short-term.

 

[PresidentK]

There has been a clear downturn last quarter but not a 'crash'... I do not think that Brazil will ever match the 20% property crash we saw in US because properties in Brazil are still reasonably priced compared with developed and developing countries. I first visited Brazil 10 years ago and bought a property 6 years ago. Brazil is unrecognizable from back then. Even 6 years ago, the poverty was all around you. The last 4 years has seen a solid rise in the standard of living in Brazil and property prices have tracked that.

 

[Mineiro]

There has been a clear downturn last quarter but not a 'crash'... I do not think that Brazil will ever match the 20% property crash we saw in US because properties in Brazil are still reasonably priced compared with developed and developing countries. I first visited Brazil 10 years ago and bought a property 6 years ago. Brazil is unrecognizable from back then. Even 6 years ago, the poverty was all around you. The last 4 years has seen a solid rise in the standard of living in Brazil and property prices have tracked that.

The last 4 years have been a complete disaster. The current government is sistematically destroying all the advances that were made possible during FHC's term in power. The lula government continued on from there and were helped greatly by an onrush of direct foreign investment and the commodity boom. However nothing was done to continue the growth acheived, largely thanks to the groundwork left in place by FHC. Infact the current decline has it's roots in lula's second term in office. Why don't you read the following article about your so called Brazilian middle classes.

Por que o número de beneficiários do Bolsa Família só cresce  - Brasil - Notícia - VEJA.com

 

[Veronica]

As this is an English speaking forum it would be helpful if you supplied translations when inserting links in foreign languages. That way everyone can have a balanced view of the topic.

 

[Mineiro]

As this is an English speaking forum it would be helpful if you supplied translations when inserting links in foreign languages. That way everyone can have a balanced view of the topic.

Hello Veronica. You want me to translate the article for you?

 

[PresidentK]

The last 4 years have been a complete disaster. The current government is sistematically destroying all the advances that were made possible during FHC's term in power. The lula government continued on from there and were helped greatly by an onrush of direct foreign investment and the commodity boom. However nothing was done to continue the growth acheived, largely thanks to the groundwork left in place by FHC. Infact the current decline has it's roots in lula's second term in office. Why don't you read the following article about your so called Brazilian middle classes.

Thank you. It is an interesting article but (of course) penned by biased journalists who make up the self-interested classes who have benefitted over the years from cheap labour washing their clothes, houses, pools etc. I was at a dinner party recently in Recife and I sat next to a well-healed lady who spent the entire evening damning the government because she cannot get affordable staff to clean her house.

I don’t get too mixed up in the politics. I keep half an eye on the economic environment to ensure my one and sole Brazilian asset (a beach house) continues to be a safe investment. That’s it really… apart from that I close my electronic gates, sit on my terrace, sip my wine, stare at the sea and generally forget about the tiresome business of life.

An afterthought, it is a general truism that we dislike our place of origin. I would not recommend my birthplace, London, to my worse enemy. My Brazilian friends think of the UK as ‘the mother of parliaments’, the ‘seat of democracy’ an ‘economic power house’, a place of tradition /culture and all that. I, on the other hand, think it is a deteriorating police state full of unhappy and unfulfilled souls. I guess we always bite the hand that feeds us… and gnaw at the maternal heart.

 

[Veronica]

Hello Veronica. You want me to translate the article for you?

It would be better if you didn't post non English text in the first place but if you do please supply a translation in future. Thank you

 

[Mineiro]

Thank you. It is an interesting article but (of course) penned by biased journalists who make up the self-interested classes who have benefitted over the years from cheap labour washing their clothes, houses, pools etc. I was at a dinner party recently in Recife and I sat next to a well-healed lady who spent the entire evening damning the government because she cannot get affordable staff to clean her house.

I don’t get too mixed up in the politics. I keep half an eye on the economic environment to ensure my one and sole Brazilian asset (a beach house) continues to be a safe investment. That’s it really… apart from that I close my electronic gates, sit on my terrace, sip my wine, stare at the sea and generally forget about the tiresome business of life.

An afterthought, it is a general truism that we dislike our place of origin. I would not recommend my birthplace, London, to my worse enemy. My Brazilian friends think of the UK as ‘the mother of parliaments’, the ‘seat of democracy’ an ‘economic power house’, a place of tradition /culture and all that. I, on the other hand, think it is a deteriorating police state full of unhappy and unfulfilled souls. I guess we always bite the hand that feeds us… and gnaw at the maternal heart.

First of all I would like to say that I'm not Brazilian but English and have lived here for over twenty years . I don't dislike my "place of origin" or the country where I happen to live, even with it's serious flaws.I can understand your views on the rich wanting cheap labour but unfortunately it goes far deeper than that. People are being encouraged by the actual government not to work through government handouts . Through the continual rises of the minimum wage Brazil is quickly destroying it's own industry. The rises have far exceeded the growth in productivity which means that its not good economic sense to employ people.Despite the continual rises the minimum salary doesn't actually buy more than before because of the inflation it creates on prices. The unemployment figures are a fantasy. The actual government regards the people who receive their handouts, as employed which I'm sure you'll agree is ridiculous.

As Jucelino pointed out to you in another post you would be wise to wait till you have lived here for longer before making so many strong assertions, especially if you don't take much interest in politics or what is happening outside of your electronic gates. As to England becoming a police state I completely disagree, after all how many forms of identification are you required to carry around with you here in Brazil? How many murders occur here per year? What percentage of those murders actually end with some form of justice? How much paper work is required to do the simplest things? A country where who actually works has to work for five months in the year just to pay all of the taxes that are then stolen, misused or given to the 50 million people who receive "bolsa familia".

 

[Mineiro]

It is interesting to see that the Brazilian economy is struggling, as are some other economies in the region, especially in light of the array of new trade agreements which have been agreed over the last few years. Personally I think Brazil could offer good value in the long term although I think we may see a shakeout in the real estate market in the short-term.

I have seen a number of experts suggesting that prices have pushed too far ahead of household incomes and there is also the issue of consumer debt which has ballooned over the last few years. This is a natural cycle in the development of an economy such as Brazil which has struggled in years gone by but now seems to be on a more even keel even though it may be standing on the verge of a cyclical downturn in the short-term.

Well you now have your answer as to the "cyclical downturn". Brazil will probably only start to come out of recession in 2018, and that unfortunately depends on the current thieves in power to pass all the necessary reforms, which unfortunately is not very likely.