Brazil housing starts drop 21.5 per cent

Brazil's housing starts fell sharply in December following several months of improvement, an industry group said on Monday, indicating a still fickle pickup in real estate activity as the economy edges closer to a recovery. The widely followed Abrainc-Fipe index showed a 21.5 % drop in housing starts in December from a year earlier, the group known as Abrainc and research institute Fipe said in a report. Still, it rose 9 percent in 2016, suggesting a potential rebound as interest rates fall toward single digits, boosting the outlook for home lending. The so-called VSO indicator, which gauges sales as a share of total units available for purchase, slipped 0.6 percentage point to 7.6 percent, indicating available inventory would cover 13.2 months' worth of demand, according to the report. Overall sales cancellations fell 14.3 percent to 3,080 contracts, the fourth straight month of declines. That drop suggests homebuilders may be turning the page on months of high cancellations that weighed on profits throughout 2016. Seeking to ease that burden, the Brazilian government is expected to propose an overhaul of the rules governing sales cancellations, potentially imposing a fine on home buyers who decide not to go ahead with purchases. Currently, there are no Brazilian industry standards for how much, if any, of a down payment should be returned to buyers, and litigation has sometimes favored buyers over construction companies.