Analysis of the Brazilian residential real estate market for 2025.

Brazil’s residential real estate market is growing strongly, fueled by strong demand and active construction. In April 2025, the FIPEZAP home price index rose 7.97% year-on-year, up from 5.76% in April 2024.

However, adjusted for inflation, price growth was 2.31%. Home price dynamics vary significantly across regions. For example, in São Paulo, prices rose 6.11% (0.55% adjusted for inflation), reaching their highest level in a decade. In Rio de Janeiro, growth was more modest at 4.62% (down 0.87% adjusted for inflation), although this is the highest annual increase since 2015. In Brasilia, prices rose 4.7%, but fell 0.79% adjusted for inflation. These differences highlight the regional characteristics of the Brazilian housing market.

Fortaleza recorded an impressive annual growth of 12.33% in April 2025, one of the highest in a decade. Salvador led the way with an incredible 20.63%, the highest growth rate for the city since data collection began. This boom is supported by strong demand, as evidenced by the 40.6% increase in sales in São Paulo in the first two months of 2025. In addition, there is a return of interest from foreign investors willing to invest in both urban and rural properties.

However, foreign investors should be aware of certain restrictions on the purchase of rural properties, requiring either a move to Brazil within three years or the use of the property for agricultural, industrial or residential projects that are consistent with the company's objectives. Overall, the Brazilian real estate market is showing strong momentum, supported by both domestic demand and the resumption of foreign investor activity.

Overall, despite the expected growth of the housing market and further increase in residential property prices in the coming months, the economic situation in Brazil requires a more detailed analysis. In 2024, the country's economy showed growth of 3.4%, slightly higher than in the previous year (3.2%), but still slower than in 2021 (4.8%). This growth was largely due to an increase in investment and household consumer spending, which was the result of government policies aimed at increasing the disposable income of the population. However, forecasts for the current year indicate a slowdown in the growth rate. The Brazilian Ministry of Finance and the World Bank predict GDP growth of 2.3% and 2.2%, respectively, while the International Monetary Fund (IMF) is even more conservative in its estimates, predicting growth of only 2%. This slowdown in economic growth must be taken into account when assessing the prospects of the housing market, as it can affect the purchasing power of the population and, as a result, the demand for residential property.

In April 2025, the Brazilian housing market showed impressive dynamics, with prices rising in all 16 of the country's largest cities. The most notable price increase was seen in Salvador (20.63%), followed by João Pessoa, Vitoria, Curitiba, Belo Horizonte and Fortaleza. While Florianópolis, Manaus, Campo Grande and other cities also showed significant growth, Brasilia, Rio de Janeiro and Recife saw more moderate price increases. However, when adjusted for inflation, real price increases were more modest, with three cities even seeing a slight decline in prices compared to last year.

Despite this, demand for housing remained strong, especially in São Paulo, where sales in 2024 increased by 35.7% compared to the previous year, continuing the upward trend of recent years. This robust demand dynamics has a significant impact on the overall health of the Brazilian real estate market.
The São Paulo housing market is experiencing an unprecedented boom. 2024 marked the eighth consecutive year of sales growth, reaching a record high in the city’s history. This trend continues in 2025: sales in the first two months soared by 40.6% compared to the same period last year, reaching 17,156 units. In response to growing demand, supply is actively expanding: the number of new residential launches in 2024 jumped by 42.6% to a record 104,431 units, and in the first two months of 2025, compared to the same period last year, an explosive increase of 130.3% was recorded, amounting to 16,940 units.

The market growth was fueled, among other things, by government support programs. Although the Minha Casa Minha Vida (My Home, My Life) social housing program, which had been in operation since 2009 and provided millions of housing units to low-income families, ended in 2020, it was replaced by Casa Verde e Amarela (Green and Yellow House), which expands opportunities not only for the construction of new housing, but also for the renovation of existing ones and the regularization of land. The Brazilian government is implementing a large-scale program to improve the housing conditions of the population, planning to regularize the title deeds of up to 2 million homes and renovate more than 400,000 homes over the next four years. As part of the large-scale Casa Verde e Amarela (Green and Yellow House) initiative, more than 1.2 million housing units have already been built by 2022, improving the lives of almost 5 million people. Particular attention is paid to socially vulnerable families, for whom about 384,000 housing units have been allocated, reaching approximately 1.5 million people. In addition, about 1.6 million families benefited from housing finance services. The program was financed with significant funding: about BRL 25 billion (US$4.46 billion) from the Superannuation Guarantee Fund (FGTS) and BRL 500 million (US$89.14 million) from the Social Development Fund (FDS). One of the key advantages of Casa Verde e Amarela is the lower interest rates compared to the previous program, Minha Casa Minha Vida (MCMV).

For example, families with a monthly income of up to BRL 2,000 (US$357) living in the North or Northeast region can expect a reduction in the annual interest rate to 0.5%, while those with incomes between BRL 2,000 and BRL 2,600 (US$357 and US$464) will receive a reduction of 0.25%. Unlike the MCMV, which included four categories, "Casa Verde e Amarela" consists of three main ranges that determine the size of the subsidies and interest rates depending on the monthly income of the family. In the first category, families can benefit from reduced interest rates, subsidized housing, property reform, and land regularization. The Brazilian rental market shows a variety of yields depending on the city. According to research by Global Property Guide, in the first quarter of 2025, the average gross rental yield for apartments in Brazil was 5.28%, slightly lower than in previous periods. Significant differences stand out among the major cities: São Paulo offers yields in the range of 4.08%-8.23% with an average of 5.94%, while Rio de Janeiro shows more modest results, from 2.89% to 7.33% with an average of 3.84%. Fortaleza shows low rental yields (2.13%-4.08%, average 3.41%), while Guarapari is more stable (4.5%-5.14%, average 4.8%). Recife stands out with high yields, reaching 6.75%-10.69% (average 9.17%), while Vitoria offers between 4.23% and 4.8% (average 4.51%).

It is important to consider the overall economic situation: after a significant increase in inflation in 2021-2022, caused by a combination of factors including economic recovery and global supply issues, inflation gradually declined in 2023-2024. Brazil’s Central Bank has been actively using the Selic interest rate to combat inflation, cutting it to 10.5% in May 2024 after a period of high rates. These economic factors certainly affect rental yields in the country.

In late 2024, Brazil began to show worrying signs of renewed inflationary pressures, forcing the country’s Central Bank to resort to monetary tightening measures. In September 2024, the Monetary Policy Committee (Copom) raised the key Selic interest rate by 25 basis points, bringing it to 10.75%. This decision marked the beginning of a rate hike cycle that continued in the following months, culminating in a 50 basis point increase in May 2025, bringing the Selic rate to 14.75% per annum.

In its May monetary policy statement, the Central Bank emphasized that the Selic rate hike aims to return inflation to the target level throughout the monetary policy period. However, the bank acknowledged that the risks to its inflation forecasts, both upside and downside, remain higher than usual. Particular attention was paid to the impact of external factors, such as U.S. trade policy, and domestic factors, including fiscal policy, on the behavior of asset prices and inflation expectations in the country. Thus, the Central Bank of Brazil is in a difficult position to curb inflation in an environment of high uncertainty.

After a period of economic recovery after 2017, real estate lending has experienced a boom. The culmination was in 2021, when the volume of such loans soared by 65.7%, reaching an all-time high of R$205.41 billion. The total number of loans issued also more than doubled, reaching a record 866,331. However, in the following years, despite strong demand, the growth rate slowed, with a decline in lending in 2022 and 2023. In 2024, the market showed signs of recovery, with an increase in both the total value and the number of loans issued. This trend continued in early 2025, despite rising interest rates, indicating the continued strength of the real estate market.

Brazil's economic problems, which began with the global crisis of 2008, have had a number of consequences that affected the housing market and the overall economic situation in the country. Initially, in an attempt to stimulate the economy, the Central Bank lowered the Selic base rate, which led to an increase in consumer lending and inflation. However, economic growth slowed and civil unrest broke out in 2013 over rising public transportation costs and concerns about corruption. In response to rising inflation, the Central Bank began raising its benchmark interest rate, leading to a sharp slowdown in mortgage lending and a fall in real house prices. The housing downturn continued amid political turmoil, exacerbating the country's economic instability.

The Brazilian housing market showed a mixed picture in the first quarter of 2025, with a strong increase in home mortgage lending and a sharp decline in construction lending. The total value of mortgage loans for real estate purchases soared 32.5% year-on-year to reach R$34.61 billion (US$6.17 billion), while the number of loans issued rose 37.6% to 95,912. However, the situation in the construction sector was the opposite: the value of construction loans fell 45.8% to R$3.7 billion (US$660.4 million), while the number of such loans fell 55.4% to 13,115. Despite these fluctuations, the total value of outstanding housing loans exceeded 10% of the country's gross domestic product, highlighting the importance of the housing sector to the Brazilian economy. The significant increase in housing prices, especially in cities such as São Paulo (up 224.74% from 2008 to 2015) and Rio de Janeiro (up 266.1% over the same period), has led to a decrease in housing affordability and an increase in the number of renters. The growth of mortgage lending in previous years was driven by pro-market reforms, lower interest rates and an expanding middle class, while the discovery of major oil fields and the hosting of the Rio de Janeiro Olympic Games in 2016 have stimulated demand for housing and commercial space.