Properties are assets with high individual value and, generally, they have a great relative weight in families' budget. The acquisition of a property largely depends on a long-term financing availability. Thus, the real estate market performance is influenced by several macroeconomic factors, as PIB increase and per capita income, interest rates levels, inflation, credits availability and consumer trust.
Inflation and its response measures - as the increase of interest rates - generally result in a decrease in population's income and, as a consequence, economic activity expansion. Increase in inflation rates affects the real estate market to the extent that they reduce the economic activity, consumption and investments. Besides, a relative evolution of inflation indexes, specially INCC (National Construction Cost Index) and IGP-M (General Market Price Index) that generally index construction costs and future collecting in installment sales of units, respectively, affect profitability in the real estate development activity.
Demographic and social and cultural factors
Brazilian population growth, an increased youth percentage in relation to the population total, a population tendency to aging, a decrease in the number of inhabitants perhousehold and a social and cultural preference to home ownership are elements that combined comprise a high demand for property in Brazil in the following years.
According to IBGE, from 2000 to 2010, Brazil's population has increased from 169.8 million to 190.8 million inhabitants, representing a compound annual growth rate of 1.17%. According to the same institution, a reduction in death rates combined with a natural reduction in birth rates results in a gradual aging tendency of the Brazilian population. In 2002, the number of people over the age of 60 had already overcome that of children under the age of five.
Despite the decrease in the youth percentage number in relation to the total population, the Brazilian population growth rate and the Brazilian youth population in absolute terms, provide a high demand potential for property in the next two decades. In 2010, the population under the age of 25 represented 42.0% of Brazil's total population.
The graphic below describes the Brazilian population distribution per age range according to 2010 Demographic Data.
Fonte: IBGE – Censo 2010
The increase in the number of residences occupied by one person has also contributed to the average reduction. In ten years, the percentage of residences occupied by a single person increased from 7.5% to 10.2% of the total number of residences.
Still, according to a study conducted by Fundação João Pinheiro, the Brazilian deficit was of 6.273 million housing units, most of the deficit being concentrated in classes D and E:
|2012||Déficit Habitacional por Renda Familiar
(em Salários Mínimos)
|Déficit Habitacional Regional|
(em milhares de unidades)
|Até Três||Três a Cinco||Cinco a Dez||Acima de Dez|
|A pproximate total housing shortage||4.505||534||293||98||5.431|
Source: estimates from Fundação João Pinheiro