Having a home to call their own remains one of the great desires of Brazilians. After all, rent expenses do not represent any return or equity increase, in addition to putting a lot of money on the budget.
And as times change, real estate represents security and hope for a better future, whether to provide stability for the family or as an investment to live on rent in retirement.
It is for these and other reasons that the real estate market remains heated, even in the face of the crisis caused by the new Coronavirus pandemic. Lower interest rates on mortgages help explain this.
In 2020, we had a historic drop in the Selic rate, which influenced the interest on property loan lines. This scenario aroused the interest of those looking for a property to live in and, in addition, the valuation of properties caught the attention of those thinking about investing in 2021.
But what will this year be like for the real estate market? Is shopping during the crisis caused by the Covid-19 pandemic a good deal?
Scenario: how the pandemic affected real estate
The real estate market is characterized by long cycles: the construction of a project can take years and a real estate financing too. Thus, it is not possible to predict what will happen in such a distant horizon, and a one-off event such as the pandemic could not generate as much volatility in this sector.
With the restrictive measures to contain the advance of the new Coronavirus, we were forced to spend more time indoors. And this ended up revealing needs in relation to housing, increasing the search for properties with more space.
Along with this, we had a sharp drop in the basic interest rate, the Selic, which influences real estate financing.
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Let’s understand the Selic dynamics and how it interferes with credit lines.
The acronym Selic stands for Special Settlement and Custody System. The name is difficult, but it is nothing more than a basic interest rate that banks, card companies and financial institutions use to calculate the interest that will be charged on different types of credit.
So, having this understanding is critical to deciding when to invest in something of such high value, such as real estate. From August 2019 to December 2020, the Selic had nine consecutive drops, going from 6.5% per year to the current 2% per year.
The lowest historical level of the basic interest rate allowed a reduction in the rates charged on real estate financing. And since we are talking about a type of credit that can last up to 30 years, the effect of interest on the final account is considerable.
Real estate financing simulation
Here we have a simulation of financing with different Selic rates. To give you an idea, in 2016, this rate was 14.25% per year.
Considering a property of R$ 250 thousand, with 80% of the financed amount (R$ 200 thousand), payment term of 240 months and maximum income commitment of 30%, we have:
|Financing interest rate||12%||7%||5%|
|CET (Total Effective Cost) Approximate||13%||8%||5%|
|First installment with insurance||BRL 2,872.00||BRL 2,144.00||BRL 728.00 in the month|
|Total amount paid||R$ 444,660||BRL 353,773||BRL 90,887 throughout the financing period|
Source: FGV / Based on the SAC payment system
Why buying property despite the crisis caused by the Covid-19 pandemic can be a good deal?
Whether to live or invest, real estate has never been so accessible. The drop in Selic facilitated real estate financing and, even if the rate shows an increase throughout 2021, the market expectation is that the levels will remain lower in credit lines.
Having a better payment condition, the Brazilian also had the opportunity to evaluate the choice of apartment or house from another perspective. Maybe that property that wasn’t in the budget before now is. This opens up other possibilities, such as buying property to earn rent.
According to FipeZap, the average return on residential rent (annualized) ended December 2020 at 4.70%. This indicator can be used to assess the attractiveness of the real estate market in relation to other available applications.
It is noteworthy that, when investing in real estate, the gain can come not only from rent income, but also from the appreciation of the property.
In this context, investing in a property on the floor plan can be a good deal, as it may be worth more when it is finalized. One of the advantages of buying a property still on the floor plan is the cheaper cost it can have in relation to a new apartment. Ready to move in.
There is also potential for gains if you bet on a neighborhood with growth potential, which is receiving improvements in infrastructure and transportation, such as subway stations, trains, bus stops, shopping malls and markets.
An important tip, if you are interested in buying property directly with the construction company, is to research its history and strength in the market.