Lower interest rates may boost Brazil’s real estate market

The Brazilian Central Bank’s Monetary Policy Committee has once again lowered the country’s benchmark interest rates, to a record-low 4.25 percent a year. It is the latest effort to stimulate the economy, amid growing uncertainty in the global landscape caused by fears of a Chinese slowdown due to the coronavirus outbreak.

But even though basic interest rates have been at all-time lows since March 2018, the real estate market shows there’s still room for stimulus in Brazil.

“Liquidity is not yet typical of times of bonanza, we still see some hardships. We are still expecting measures [of monetary easing] to come into effect,” said José Augusto Viana Neto, president of the São Paulo real estate agents association (CRECI-SP) to The Brazilian Report.

Indeed, selling prices of residential properties have shown little recovery in Brazil, according to statistics from FipeZap. Over 2019, the residential properties selling index was stable in absolute terms; however, consumer inflation measured by IPCA reached 4.31 percent and IGP-M, the index used to adjust property rentals, increased 7.30 percent in 2019—making 2019 the fifth consecutive year of devaluation for...