Brazil's property bubble should avoid bursting in 2012, a Reuters poll showed on Friday, forecasting real estate prices in Latin America's largest economy would increase modestly after years of stellar rises.
The poll of 15 banks, research groups and business associations, taken over the past week, downplayed the risk of a sharp downturn, with a recent credit boom underpinned by a steady improvement in wages and affordability conditions.
The rapidly expanding Brazilian middle class is expected to keep a close eye on opportunities to stop renting and move into ownership, holding up prices even after they almost doubled in some neighbourhoods.
"When the slums disappear and the Brazilian housing sector gets more mature, then prices will stop rising," said Andre Perfeito, chief economist at Gradual Investimentos brokerage.
In Sao Paulo - Brazil's biggest city - average new home prices skyrocketed 85 percent from April 2009 to October 2011, to 6,019 reais per square meter ($3,250), according to a survey conducted by the Ibope polling firm. Consumer inflation rose nearly 15 percent over that same period.
"There are structural factors in place to justify such a strong performance", said Paulo Cesar das Neves, analyst for the local research firm LCA.
"A sharp fall in prices in 2012 is very unlikely."
Brazilian home prices should rise between 5 and 10 percent in 2012, according to nine of 14 forecasts in the Reuters poll, with one analyst saying there would be a lesser rise. Three saw no change in prices, while one thought they would rise more than 10 percent. Overall consumer inflation is expected to hover around 5.5 percent in 2012, according to market forecasts compiled by the central bank.
That performance turns the Brazilian housing market into a rare bright spot in a gloomy scenario around the globe.
Another Reuters poll showed on Wednesday that British house prices will fall by 1.7 percent in 2012, and the latest Reuters poll about US home prices showed that no increase is expected until 2013.
Further gains, however, should be smaller than in 2011 as the Brazilian economy cools off. Brazil's gross domestic product (GDP) growth slowed to a standstill in the third quarter as the eurozone debt crisis hurt global demand and is expected to grow by around 3 percent in 2012, much less than the 7.5 percent growth recorded in 2010.
Most of 2012's rise in house prices will be concentrated in the first half of the year, added the participants. Seven out of 12 thought prices would stabilise by the end of the second quarter of next year.
There is also a sense that overall levels are a bit too pricey. On a scale from 1 to 10, where 1 is extremely undervalued and 10 is extremely overvalued, the poll showed Brazilian house prices at 6. Estimates ranged from 4 to 8.
That is not seen as an early sign of a bubble burst, though. Asked to rate the risks of a sharp downturn in the Brazilian housing market, all but two of the 15 analysts who answered the question said they were "low" or "very low".
For most market watchers, the key factor is that home prices in Brazil had lagged far behind the rest of economy during the "lost" decades of 1980 and 1990, when Brazil struggled to control hyperinflation and suffered with low growth rates and very modest credit expansion.
Most Brazilian buyers do not enter the property market to make money, but rather to get a permanent residence. That reduces the risk of an abrupt sell-off, analysts say.
And, with the unemployment rate near record lows, such demand should remain for some years yet - fostered by Minha Casa Minha Vida (My Home, My Life), the government's flagship programme worth nearly 160 billion reais.
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