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Whose dreams will come true?

Posted by Sextant Properties on December 15, 2020

The opening ceremony of the 20th edition of the World Cup will take place in a few hours. The beautiful spirit of Brazilian carnivals is known all over the world; we can all expect unforgettable memories.

Two hours after the show, the competition kick-off will be handled by the Japanese referee Yuichi Nishimura with what is sure to be an exciting opener between Brazil and Croatia.

47 matches will follow to determine the quarter-finalists: the point at which the competition gets serious. From this stage onwards, each player can almost feel the gold medal around their neck and fans smell the sweet scent of victory drawing ever closer.

Several countries are in the running as potential winners; however, the host country, with its talented team and the support of its home population, will do everything in their power to add a 6th trophy to its World Cup winners’ cabinet.

This event will put ‘King Pelé’s’ country in the spotlight for a month. Although Brazil’s hosting of the World Cup leads to several debates regarding its organisation and the allocation of resources in a developing country, it is simply not our role to comment on this. We are here to talk about what we do know: property.

The country of Samba, the Corcovado and spectacular football has seen rocketing levels of growth over the past few years, a trend that has spilled into the Brazilian property market.

According to a study by the Brazilian publication, Epoca, the mean price per metre square has increased by 175%!
This is confirmed in several reports, including a survey from Fontes: Global Property Guide. It highlights the fact that among the 36 countries studied, Brazil is the World Champion on both a 12 month and 24 month period with property price increases coming in at 33.5% and 46.4% respectively.

As in France (the country we sell houses in) and the UK (the country we live in), niche markets can confirm or question this evidence. Several estate agencies in the popular city of Sao Paulo have reported price increases of 200% over the last 10 years! This figure swells to 280% in the prestigious ‘Jardins America’ area.

What are the causes of such steep price increases?

The positive macro-economic indicators and an outstanding development in wider access to mortgages and credit (a 3000% increase since 2001 according to the Brazilian Association of Credit Entities) have contributed to this quick development.

According to a survey from Secovi, the growth of the Brazilian property market seems to be slowing down slightly. This observation has been confirmed by the Creci of Sao Paulo who have noted a 25% reduction in sales of previously owned properties since December 2010.

Today, many economic experts are worried about the potential explosion of this property bubble which could threaten the pace of Brazil’s economic development.
Several factors lead one to believe the threat of such a burst is quite real. For instance, following massive GDP growth of 7.5% in 2010, over the past 3 years, it has actually decreased (2.3%, 1%, 2.7%). Moreover, credit institutions are worried as people continue to buy properties at market price out of fear it will continue to increase.

The Brazilian economic authorities have offered reassuring rhetoric about the financial health of the country and abstained from speculation. Moreover, they highlight the low unemployment rate and the new entrants coming on the market.

This situation is certainly one to follow, but right now, let’s enjoy a month of spectacular football and hope this event will be the celebration it should be.

Investing in Brazil, with its seemingly endless sunny and sandy beaches might be tempting but the property market is very expensive and unstable, making investment highly risky. For football fans, it is important to remind you that the Euro 2016 will take place in France! Visit our website or give us a call to find your perfect property near your favourite stadium to follow all the England games!

In conclusion of this article, I only have one thing to add … ALLEZ LES BLEUS!

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