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Posts Tagged ‘Housing boom’

Latin America’s housing boom: It’s not all froth

Posted by Ram Kumar Shrestha on July 28, 2011

Big price hikes at the top end reflect a new, richer reality

DINNER-PARTY conversations about house prices, newspapers packed with ads for glitzy show-homes and properties changing hands for twice their price three years ago: recently Brazil’s business capital, São Paulo, has felt a lot like pre-bust London or New York. The property fever there and in other Latin American countries makes some fear that the region’s economic renaissance may have become over-exuberant. But the housing boom is grounded in rising prosperity rather than excessive debt.

In select parts of Brazil’s big cities, property prices are certainly racing ahead. IBOPE Inteligência, a research firm pioneering the country’s first statistically sound house-price index, says that in 2010 the average price of a new apartment in São Paulo rose by around a quarter and by much more in the poshest areas. Estate agents claim prices in such choice locations are up by 80% in three years; and that in similar parts of Rio de Janeiro, boosted by the discovery of huge oil reserves off the coast and the prospect of hosting the Olympics in 2016, they have doubled.

The property boom is being driven by a hefty increase in the number of potential buyers. During the past eight years the number of Brazilian households with incomes higher than ten times the minimum wage rose by more than half, to around 18m. The purchasing power of the newly well-off has been boosted further by greater availability of mortgages. Read the rest of this entry »

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