Bubble trouble in brazil

Property prices are skyrocketing in Brazil. The construction sector is booming. And the mortgage market is expanding rapidly. But there is a growing concern that all this is unsustainable. And imbalances in the economy — an overvalued currency and high inflation — are exacerbating the dangers of the looming credit and property bubble.

The average asking prices of new apartments across the country soared by 24.7% in April 2011 from a year earlier, according to Exame Magazine (using data from Ibope Intelligence, the largest Brazilian market intelligence firm).

Based on the Ibope Intelligence figures, in April 2011:

*In Ipanema, Rio de Janeiro’s most expensive district, the average price of new properties rose 36% y-o-y to BRL13,031 (US$8,212) per sq. m., while the price of existing properties increased 25% y-o-y to BRL12,134 (US$7,646) per sq. m.

*In Jardim Paulista, Sao Paolo’s most expensive district, the average price of new properties rose 39% y-o-y to BRL9,120 per sq. m (US$5,747); the average price of existing properties escalated 49% y-o-y to BRL6,959 (US$4,385) per sq. m.

Source: GlobaPropertyGuide.com