By Jay Forte, Contributing Reporter

RIO DE JANEIRO, BRAZIL – The FipeZap Index, which tracks the values ​​of new leasing contracts in nine cities across Brazil was started in 2008, just as the country and especially Rio de Janeiro started to see wild growth in real estate value and rental rates. Now the index is showing a record monthly decrease in actual rent prices.

Rio de Janeiro, Brazil, Brazil News.
The neighborhoods of Leblon and Ipanema are the most expensive in Rio, photo by Jake Gordon/Flickr Creative Commons License.

A report in April 2012 by Capital Economics, detailed how residential property prices in São Paulo had doubled within five years, while prices in Rio had tripled. Since then they have continued to climb with prices in São Paulo now tripled since 2008, while prices in Rio have almost quadrupled. A nation-wide price series began in mid-2010 and shows that prices at a national level have increased by seventy percent in just four years.

Now with the slowing economy, the housing market also shows slower pace and as a result, the price of rent fell more. In August, the FipeZap Index registered an average nominal decrease of 0.72 percent compared to July, the largest monthly decline of the series started in 2008, and it shows that average rent prices were cheaper than the month before.

In twelve months, the result also broke the record for the series. The nominal decline of 1.81 percent was the largest ever recorded and the third consecutive negative variation in this comparison. In twelve months, the strongest drop occurs in Rio: 7.72 percent, almost double the second place, Curitiba, a decline of 3.98 percent. Campinas and Santos presented the highest increases in twelve months, 4.43 percent and 4.18 percent respectively.

Rio also recorded the biggest drop also in the monthly comparison, with -1.48 percent, also far larger than Salvador (-0.63 percent), São Paulo (-0.60 percent) and Brasília (-0.53 percent). In 2015, the price of rents in Rio has accumulated contraction of 4.98 percent, also the highest among the surveyed cities.

Raone Costa, an economist at the Economic Research Institute Foundation (Fipe), told O Globo that the main economic factors affecting the real estate market are income and credit. With the fall in wages and more difficult access to credit, the demand for housing fell by 2015. Costa said that the economic situation of the country reinforces the downward movement as a trend.

In January, Neil Shearing of Capital Economics said “Other emerging markets have seen similar increases in mortgage lending to Brazil, but house price gains have been far more modest. [Also] house prices seem expensive relative to rents. […] Based on a range of indicators, in 2014 we estimated that at a national level Brazilian housing could be overvalued by around 30-50 percent.”


  1. In Rio, if you look and bargain hard enough, you can get at least 20% lower rentals than the advertised price. The reason is that many owners who “didn’t need” the income from rentals, before the crisis hit, now do need the income. That puts a lot more places back on the market.


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