I recently read an article in a Brazilian newspaper quite lucid and realistic. The article brings to light all the signs that are already clear to anyone: that real estate prices in Brazil have unrealistic prices and that after the World Cup they will begin to fall. This is probably the most expected scenario for people interested in buying property in Brazil. The real estate and construction industry have already seen a drop in the number of transactions.
The article was published in Portuguese but below are the main points.
Property prices in Brazil should have a severe devaluation after the 2014 World Cup, in the opinion of professor of Economics at FGV (Fundação Getulio Vargas) and blogger at UOL, Samy Dana.
The professor estimates that prices of some properties in the 12 host cities for the World Cup could plummet up to 50% after the sporting event, especially in the city of São Paulo. Some of these areas have been receiving heavy investment in infrastructure, which therefore would value the property prices. Moreover, there are those who think of profitting from rental homes to tourists during the event.
Demand for rental properties in fact, exist, but Dana argues that the current price levels seem unfounded and far above the reasonable limit.
And it is not only the illusion linked to the event that should pull prices down, according to Dana. As mortgages were given more intensively between 2009 and 2010, the year of the World Cup can mark a period of great delinquencies in the sector.
Because of this scenario, real estate is not a good investment in Brazil at this time. As the homeowner does not want to lose money on the deal, at first, they will not reduce the price, but the problem, according to Dana, is that the buyer is not going to want to pay. “The first sign is not the price decrease, but the number of trades. The fall is a process that takes a little longer to start, but as more people want to sell, and not a lot want to buy, prices will fall,” he says.
The original in portuguese is here http://economia.uol.com.br/ultimas-noticias/infomoney/2012/08/28/precos-dos-imoveis-vao-cair-forte-apos-a-copa-diz-professor.jhtm