Brazil's House Prices Lower in August Due to Poor Economy

Brazil's House Prices Lower in August Due to Poor Economy

Brazil's House Prices Lower in August Due to Poor Economy

The FINANCIAL -- Brazil's house prices declined in August as Latin America's largest nation faces the negative combination of poor economic activity, high interest rates and inflation, according to Nasdaq.

House prices fell 0.01% in August, according to FipeZap, an index of home prices produced by a think tank affiliated with the São Paulo state university.

The figure marked the first nominal decline since the index started to be compiled in mid-2008. By comparison, inflation in August picked up at a projected level of 0.25%.

For the 12-month period ending in August, house prices picked up 3.32%, less than the projected inflation for the period, seen at 9.56%. The country's statistics bureau will publish inflation figures for August and for the 12-month period next week.

House prices in the most desirable neighborhoods of Rio de Janeiro and São Paulo have doubled from 2008 to 2013, according to FipeZap. But real-estate prices in the country over all have recently lost traction as the sluggish economy as well as high inflation and interest rates damaged consumers' confidence.

Brazil's economy is expected to decline around 2.26% this year, according to economists surveyed by the country's central bank. The central bank is obligated to keep the Selic base rate at a high level--it is currently at 14.25%--to combat inflationary pressures.