The next crop of real estate launches in Brazil should have more expensive properties due to higher inputs and higher interest rates, according to the president of the CBIC (Brazilian Chamber of the Construction Industry), José Carlos Martins.
The size of the price increase will depend in part on market dynamics, but the sector has already been impacted in recent months by higher raw material prices without a full pass-through to buyers.
The INCC (National Civil Construction Index), the main reference for the real estate sector in the country, rose 21.76% between September 2020 and the end of 2021. In the period, in the cities of São Paulo, Rio de Janeiro, Curitiba, Belo Horizonte and Belém, the value of properties rose below this level, between 10% and 15% according to the CBIC.
According to Martins, the inflationary effects of the war in Ukraine should further increase the cost pressure in the sector.
The civil construction GDP advanced 9.7% last year after suffering a loss of 6.3% in 2020. Between 2014 and 2021, the sector suffered an accumulated retraction of 26%.
According to industry experts, properties from the current crop that are still for sale have more affordable prices because they do not have this price pressure.
“It is inevitable (price increase). It is impossible to have someone who absorbs a 20% cost increase”, said Martins.
The president of Sinduscon-RJ, Claudio Hermolin, reinforced that if the sector is not able to pass on all the cost pressure, the pace of launches may be reduced.
“Nobody is going to launch something that can’t bring profitability,” he said Hermolin.
The rise in costs tends to affect mainly the poorest families, who commit a good part of their income to purchase the property, said Martins. To try to minimize the economic effects on this niche, the construction sector has asked the federal government for new support measures under the Casa Verde Amarela program.
“This is the public that had the greatest effect from the increase in real estate prices. Data from Caixa Econômica show that 70% of borrowers, almost all from Verde Amarela, use 100% of their income capacity (to pay installments),” he warned. Martins.
“Last September, the government readjusted the subsidy amounts for poorer families. This week, Caixa’s board of trustees adopted a new round of subsidies.
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