The number of new real estate properties in Brazil fell by 30 percent year-on-year in the first quarter of 2023, according to data released by the Brazilian Chamber of the Construction Industry (CBIC).
Both construction and sales of new properties are down this year. There were 48,500 new properties between January and March, 44 percent less than during Q4 2022 and the lowest number recorded since Q2 2016. Meanwhile, 73,000 new property units were sold in Q1 2023, down 9.2 percent from a year earlier.
The number of new properties that remain unsold also fell in Q1 2023, by 8.2 percent compared to Q4 2022. A total of 273,331 properties were on the market at the end of the last quarter. The CBIC notes that considering the average sales over the past 12 months, without any new properties, the housing stock would dry up in 10.8 months.
The figures come from a survey conducted by the CBIC with the consulting firm Brain in 207 Brazilian cities.
As in other areas of the Brazilian economy, high interest rates are being blamed for the unimpressive performance. “We don’t have a problem with demand, the biggest problem we see in the market today is confidence in the economy and the high cost of interest,” said Celso Petrucci, head of CBIC’s real estate industry department.
Mr. Petrucci fears that if the downward trend in the real estate market is not reversed in the coming quarters, there could be a shortage of real estate units, which would push up prices.
CBIC President José Carlos Martins said: “We need to keep an eye on this drop [in new properties] because the next movement could be lower sales, and consequently, a lower number of jobs created.”
The survey also shows that the government’s Minha Casa, Minha Vida social housing program currently represents a smaller share of new properties and sales than before — 35 percent of new real estate in Q1 2023, compared to 42 percent last year and 56 percent in 2021. The quarterly fall in Minha Casa, Minha Vida property sales (down 15.9 percent) was also more pronounced than in the real estate sector as a whole. Sector representatives note that this reflects uncertainty regarding the new rules and value limits for the program.
Other factors negatively impacting the sector include uncertainty over the FGTS mandatory severance fund for workers — which can be used to purchase property, and on which a Supreme Court ruling to adjust the fund’s amounts is stalled — and inflation affecting construction materials.
“There is no lack of desire and people who want to buy, what is needed is to create reasonable conditions for them to purchase [property],” Mr. Martins said.
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