After 5 years showing low development rates, reaching recession levels mainly in 2015 and 2016. Years in which the real price and sales fell, 2019 shows a year of resilience and growth for the real estate market in the country. Civil construction figures not only stabilized and resumed growth, but prices also showed some strength.
As we approach 2020, those involved in the real estate sector and also the families that are going to buy the first property next year are wondering if things will continue to improve.
The good news is that analyzing the partial results for 2019 we see that everyone points to a recovery in 2020. In this way, we list here 5 positive indicators observed in 2019.
Share in GDP
The GDP data for the 3rd quarter of 2019 released by the IBGE highlight the real estate sector as the main growth driver. The sector grew 1.3% in the third quarter in relation to the second and 0.4% in the accumulated in 12 months.
The real estate sector was one of the only segments of the industry that showed signs of growth in 2019. There is an expectation that civil construction will end the year with a growth of 2%, which is twice the amount predicted for the expansion of the economy, which is around 1%.
In 2019 according to data from Cbic (Brazilian Chamber of the Construction Industry), civil construction was responsible for the creation of about 117 thousand new formal jobs, which corresponds to 13% of all vacancies generated in 2019.
Interest rate reduction
Copom reduced the SELIC by 0.5%, reaching the historical level of 4.5%, the lowest basic interest rate ever practiced in history. The reduction prompted banks to lower their interest rates, including mortgage lines.
In this way, the reductions provide access to real estate financing that reach new portions of the population. Previously unable to afford interest rates.
Investments in the real estate market
As previously mentioned with the falling basic interest rate, conservative fixed income (savings, direct treasury based on SELIC) is no longer able to deliver high profitability, making it unsatisfactory for many investors.
Thus, with formal investments yielding less, the search for Fii’s (real estate investment funds), which are funds composed of investments in the real estate sector, has grown this year.
Fii’s can be made up of both physical properties, such as shopping malls, business buildings and hotels. Another modality is paper funds in which the equity is composed of financial investments from the real estate sector, for example, LCI and LCA.