Brazil Real Estate Property Prices Fall Against Inflation

By Nelson Belen, Contributing Reporter

RIO DE JANEIRO, BRAZIL – In September, the average price of real estate in Brazil rose 0.12 percent, according to the latest FipeZap index, which tracks fluctuations in home and apartment prices advertised for sale in twenty Brazilian cities. This was the largest monthly variation since July 2015, however, the increase is below the Broad National Consumer Price Index (IPCA) for the same period, 0.24 percent, according to the Central Bank.

Of the twenty Brazilian cities analyzed in September by FipeZap, only Belo Horizonte, Salvador, Recife, Porto Alegre, Curitiba, Florianópolis, São Caetano do Sul and Santos beat the IPCA, the measure of inflation in the country.

Despite showing a slight increase of 0.09 percent for September, Rio de Janeiro fell short of the 0.24 percent IPCA inflation rate for the month. In September, São Paulo actually registered a slight decline for the month, dropping 0.01 percent.

In the last twelve months, the FipeZap index for the country rose 0.22 percent. In the same period, inflation measured at 8.79 percent, indicating that considering the general rise in prices, the index, adjusted for inflation showed a real decrease of 7.88 percent.

During the twelve-month period, Vitória saw the biggest increases, with property prices rising by 5.86 percent. The biggest decline was in Rio, which saw prices tumble 2.83 percent. None of the twenty cities included in the FipeZap index recorded higher variations than the rate of inflation for the period.

“Prices have gone down in Rio most probably because of the Olympics,” explained Charlie Jonas, Sales Director at real estate agency, Rio Exclusive. “Prices were particularly high and stayed that way because of the high rental values during that same period,” he added. “Now that the Olympics are over we have noticed a clear fall in selling prices and an increase in sales volumes.”

According to FipeZap, the Cidade Maravilhosa still retains the distinction of having the most expensive price per square meter in Brazil, with an average selling price in September of R$10,232 per square meter. The upscale neighborhood of Leblon, in Rio’s Zona Sul, was the most expensive in Rio, averaging R$21,789 per square meter.

Despite the distinction, Jonas expects Rio sellers to adjust to the current market conditions. “Owners who haven’t yet revised their asking price will do so as there are some rather big price differences for the same kind of properties,” he concluded.

Brazil’s largest city, São Paulo, was right behind Rio in September, averaging R$8,612 per square meter. Coming in a close third was Distrito Federal at R$8,544 per square foot.

Among the twenty cities surveyed, the cheapest per square foot was in Contagem, at R$3,613.

Brazil’s Broad National Consumer Price Index (IPCA) is a monthly inflation index that measures the change in prices of a fixed set of goods and services consumed by Brazilian households with monthly incomes comprised between one to forty minimum wages.

The FipeZap Index is prepared by the Economic Research Institute Foundation (Fipe) using data from the Brazilian Institute of Geography and Statistics (IBGE), in partnership with the real estate website, Zap Properties, which has over 290,000 listings each month.