Macroeconomic Cycle and Real Estate Dynamics: A Comparative Analysis Between Local and National Between 2009-2020

Understanding the macroeconomic cycle is fundamental for explaining the dynamics of real estate in each given area, as properties are assets susceptible to the influence of variables such as interest rates, liquidity, inflation, exchange rates, wages, employment, and economic growth. However, despite the solid theoretical foundation of these hypotheses, it remains uncertain which macroeconomic variables are most relevant to the dynamics of the real estate sector in each given area. Based on fiscal data obtained from the Real Estate Transfer Tax (ITBI) from 2009 to 2022, an empirical study was conducted using a VAR model (vector autoregressive model) on the relationships between the prices of vacant lots in Belo Horizonte, the capital of the third most populous agglomeration in Brazil, as well as the capital of the second most populous state, Minas Gerais, and the Brazilian macroeconomy. Considering exogenous disturbances in macroeconomic parameters, the responses of vacant lot prices over the subsequent months were analyzed. It was observed that these effects exhibited temporal variations, commonly reaching a maximum impact within one to three months. The results show that the interest rate has a significant negative effect on vacant lot prices; inflation has a maximum positive effect on vacant lot prices; economic growth has a maximum positive influence on vacant lot prices; the exchange rate (currency depreciation) has a significant maximum positive influence on vacant lot prices, being the second variable with the greatest impact on these prices; the wage mass in the metropolitan area of Belo Horizonte has a maximum positive effect on vacant lot prices. Based on these results, this work can provide suggestions for economic policies related to municipal fiscal issues, urban planning, and the regulation of the real estate market with a view to financial stability.