City of São Paulo breaks historic record for property sales in the midst of the pandemic; expert sees contradiction | São Paulo

It is difficult to walk around the city of São Paulo and not find a building work. During the pandemic, about 47 thousand new properties were sold if the first semesters of 2020 and 2021 are added, according to a survey carried out by the G1 based on data from the Real Estate Market Survey, carried out by the Union of Purchase, Sale, Lease and Administration of Residential and Commercial Properties in São Paulo (Secovi-SP). The record amidst the coronavirus pandemic and the highest unemployment rate in history catches the attention of experts (read more below).

O number of sales is higher than in the first semesters of the last four years prior to the start of the pandemic in Brazil: 45,828, if the numbers of 2019, 2018, 2017 and 2016 are counted.

According to the union, the 1st half of 2021 was the period with the most sales (29,935) of new properties in the capital since the beginning of the historical series, in 2004. For the vice president of Secovi-SP, Emilio Kallas, several factors had an influence to reach these numbers.

“[Nos últimos meses], the interest became more appropriate. we would like that [a taxa Selic] stay in the 2% that hit, which has not been confirmed, but is still at an adequate value. People are looking for property because the installments have become cheaper. There have been months in which the installment fell 15 or 20%,” said Kallas. Currently, the rate is at 5.25% per year.

“The people realized that there is a very strong pressure for apartment prices to become higher and higher, so they take the opportunity to buy while they can,” he explained.

According to Emilio, the effect caused by the Covid-19 pandemic helped in the sales process real estate market, as people became “more aware of the importance of a house”.

There was also a record in relation to releases of housing units. In the 1st semester of this year, 27,114 properties were launched new, the highest number in one semester since the beginning of the measurement.

More properties were released (36,699) in the capital in the first two semesters of the years since the beginning of the pandemic that three first semesters from 2017 to 2019 combined (33,726).

On the other hand, the housing deficit in the city of São Paulo is estimated at 474 thousand, according to data from the housing union itself. This means that almost half a million homes in the capital are in precarious conditions, with excessive density of residents – when many people share the same room to sleep – or with excessive rent.

A Homeless Workers Movement activist sits beside his mattress during a protest against government budget cuts in low-income housing programs in São Paulo — Photo: Andre Penner/AP

The number of families threatened with eviction increased by 660% in the state of São Paulo in one year, according to a survey carried out by the National Zero Eviction Campaign. The numbers reflect an impoverishment of the population and the housing shortage during the pandemic.

Only in São Paulo, 36,800 people are threatened with eviction. The survey was carried out with data reported by around 100 housing entities across the country.

Data from the Municipal Housing Secretariat showed that 55 thousand families had to move to precarious housing and favelas in the city of São Paulo due to the economic crisis caused by the pandemic.

According to the numbers, at the end of 2019, there were 372,000 families living in precarious housing distributed in more than 1,700 favelas in the capital. By 2021, this number had risen to 392 thousand homes in 1,733 communities.

Records in the midst of the pandemic

“We began to observe the market having a record of launches and a record of absorption of these launches in a period of pandemic, which is a contradiction in terms, we are very concerned about the stability of the employment of these people who are buying,” said architect Marcelo Ignatios, executive director of the Institute of Architects of Brazil (IAB).

“The weirdest phenomenon is that Brazil has the highest unemployment rate in recent history. We have almost 15 million unemployed at the same time that the real estate market is selling a lot of properties. There is a possible paradox,” pointed out Ignatios.

“In my view, this paradox is only justified while we have a low interest rate and a still high credit possibility. If the economy does not resume its activity, if the Gross Domestic Product (GDP) does not grow, the interest rate will automatically it will have to rise and economic activity no longer employs people, who start to lose their jobs,” he added.

Building under construction on Rua da Consolação, in Jardins, in the West Zone of São Paulo, it offers lofts of up to 202 m² — Photo: Cíntia Acayaba/G1

The architect explained that there is also a record on the global sales value. “Real estate is raising prices because, as there are fewer long-term opportunities for the market to build, develop and sell, they automatically start selling more expensively.”

According to the vice president of Secovi-SP, the determinations of the Strategic Master Plan (PDE) of the city of São Paulo can directly influence the increase in property prices. “It’s the big obstacle, it’s being unfair to the residents. We should reform the Master Plan. Adequate land is becoming scarce, […] you don’t use the land as you should,” he said.

However, Marcelo Ignatios, who participated in projects related to the preparation of the PDE, stated that the real estate market claim is unfair, even though the city hall has not been able to deliver the investments expected by the sector at the time the document was conceived, such as more bus lanes, subway stations and areas for the implementation of urban operations, which would reflect in the construction of more projects.

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It’s not fair to the extent that they are offering apartments for the higher classes.. The upper class is not the one whose housing deficit is the highest in the city. If you analyze the offer of properties that were produced for an income range up to six minimum wages, referring to Social Interest Housing (HIS) level 2, it also had records in São Paulo”, pointed out Ignatios.

HIS are intended for the housing assistance for low-income families, which, according to the PDE, fall into two ranges:

  • HIS 1: properties with a toilet and even a parking space (monthly family income of up to three minimum wages)
  • HIS 2: properties with a toilet and even a parking space (monthly family income of up to six minimum wages)
  • both are exempt from onerous grant of the right to build, that is, builders can build projects without the need to pay a specific fee to the city

It’s a record that is being produced in a dubious way.. [O mercado imobiliário] it was building apartments for the rich, for the upper and middle classes, and it built Social Interest Enterprises (EHIS), which are less bureaucratic, as they can be built in the entire city and do not pay onerous concessions,” said Marcelo.

“The onerous grant is an expensive fee. You can pay up to R$ 8 million to build a building on a neighborhood street,” he informed.

“A review is necessary, but who does it interest? For builders who are already building medium and high-end or it is also interesting for those who are still underserved, living in a vulnerable situation, sub-housing, slum, expensive rents with many people living in small houses , poorly located?” asked the director of the IAB.

“We understand that this review should be done with the City Hall calling upon itself the responsibility to review the EHIS rule, to review how to deliver affordable housing to the effectively low-income population. Not receiving the grant is not being supported to reurbanize slums, to produce housing units for those earning up to three minimum wages,” reiterated Ignatios.

Buildings are built on Rua Melo Alves, in Jardins, in the West Zone of the city of São Paulo — Photo: Cíntia Acayaba/G1

Heated market in civil construction

The construction industry opened 208,259 jobs in 2021 in Brazil, being 54,084 in the state of São Paulo, according to the New General Register of Employed and Unemployed (Caged).

The construction was the fourth sector that created the most job vacancies between July 2021 and August 2020: there were 310,541, behind only services (1,149,948), commerce (781,542) and industry (697,387).

The works did not stand still. As they were outdoors, as the incidence of Covid-19 was minimal, as the workers were very diligent, our production part remained normal. Even with this pandemic, it has not been interrupted. What suffered interruption were the sales stands, which, in some periods, we could not open”, pointed out Emilio Kallas.

In 2021, until the month of July, around 34 thousand housing units were produced and 35,300 were sold. In 2020, there was also a balance between supply and demand: 59.9 thousand units produced and 51.4 thousand sold.

Residential buildings under construction in Jardím Íris, in the North Zone of the city of São Paulo — Photo: Gustavo Honório/G1

Property sales and launches in the capital

Sales in pandemic years (1st semester)

  • 1st semester of 2021: 29,935 properties
  • 1st semester of 2020: 16,897 properties
  • Total of 46,832 new properties sold

Sales in the years prior to the pandemic (1st semester)

  • 1st semester of 2019: 18,745 properties
  • 1st semester of 2018: 12.001 properties
  • 1st semester of 2017: 7,888 properties
  • 1st semester of 2016: 7,194 properties
  • Total of 45,828 new properties sold

Total sales in the last 6 years

  • 2021 (until July): 35,308 properties
  • 2020: 51,417 properties
  • 2019: 44,735 properties
  • 2018: 29,929 properties
  • 2017: 23,629 properties
  • 2016: 16,170 properties
  • 2021 (until July): 34,048 properties
  • 2020: 59,978 properties
  • 2019: 64,124 properties
  • 2018: 36,804 properties
  • 2017: 30,157 properties
  • 2016: 19,157 properties

*Supervised by Cíntia Acayaba