Brazilian housing

Owner Occupation

Brazil has a relatively high level of owner-occupation in its urban areas – particularly in relation to developed, ‘old world’ economies like France, UK, US and Australia. Higher levels of urban owner-occupation are characteristic of new economies and tends to reflect less mature rental investment or subsidised markets.

As the Brazilian market develops and more international and domestic investors are attracted to the market, particularly in urban areas like Rio, it may be that rates of owner-occupation will fall as rental alternatives become more numerous.

Mortgaged Owner Occupation

Until recently, mortgages were difficult to come by and, as recently as 2007, lending in the residential sector was equivalent to just 1.5% of GDP. The level of mortgage debt in the country has more than tripled in recent years (Graph 7), but still only accounts for 6.2% of GDP, compared with 12% in Mexico, 20% in Chile, 81% in the UK and 73% in the US. This shows it to be a country in the infancy of mortgaged owner-occupation.

What is the rationale for overseas investors?

Brazil’s residential markets have been buoyed in recent years by oil discoveries off the coast of Rio, the World Cup and the Olympics, making it appealing to international investors.

Meanwhile, Brazil’s biggest cities are being ‘cleaned up’, government taking a zero tolerance attitude to the crime, which has dogged the country’s profile in recent decades. Improved access to credit and a rapidly expanding middle class has enabled increasing numbers of people to buy their own home, and this has put upward pressure on prices.

It is relatively easy for foreigner’s to buy real estate in Brazil. Overseas nationals can buy Freehold without restriction – except very large farms and islands/coastal land tracts that could be deemed ‘militarily sensitive’. International buyers can purchase freely in Brazil, but do require a tax number from the Government (a CPF).

São Paulo and Rio are two of the cities leading the Brazilian residential property market. Prices in São Paulo have risen by 127%, since the beginning of 2008, and by 189% in Rio de Janeiro. Rental growth is up by 86% in São Paulo and 129% in Rio over the same period.

Taken from
Spotlight: Brazil Residential Property Market