The downturn began in 2014 and was triggered by an economic slowdown and political scandals related to the Lavajato process. The downturn was broad, severe, and due to the political crisis, longer than normal. Launches which had peaked at 38,000 were only 18,000 at the trough. Bank Credit tightened from R$112.9 billion to R$46.6 billion. Inventory numbers also increased significantly from 5 months of sales in 2010 to 28 months of sales in 2016. Unit sales went from a peak of 36,000 units in 2010 to a low of 16,000 units in 2016. It was brutal.
The volume of inventory reached the peak of the inventory turnover indicator in 2016 with 28 months of sale. By 2017 we already had the first reduction in the indicator to 26 months.
The effects on the market were quite severe. It was particularly harsh for developers who focused on sales for small investors who were effectively “flippers”. These sold well at one time in the market but did not have a floor of demand once price increases stopped, and then these sales to small investors went to almost zero.
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