By Lisa Flueckiger, Contributing Reporter
RIO DE JANEIRO, BRAZIL – The increase in real estate rates over the last twelve months has been below inflation in five neighborhoods in Rio de Janeiro, showing a decrease in real prices. Real estate prices in general have been stagnating dismissing the long held speculations about a real estate bubble in Rio de Janeiro.
Lagoa was the neighborhood with the smallest increase in real estate rates this year, as prices only rose by two percent since last December, while inflation was at 6.5 percent in the city. The average square meter went from R$17,296 to R$17,642 in the last twelve months and in November real estate prices in Lagoa decreased by 0.65 percent compared to October.
The same can be observed in Flamengo, where prices decreased by 1.03 percent last month and only rose by 2.75 percent overall. In Centro the square meter rose 4.45 percent in the last twelve months, while in Méier the increase was 4.68 percent and in Laranjeiras 5.2 percent, all below inflation.
However, Leonardo Schneider, Vice-President of Secovi Rio, the housing union, urged for caution: “I don’t think prices will fall dramatically. What happened was that in some neighborhoods demand was lower than supply.”
Yet, real estate prices over the entire city have basically stagnated in November. The Fipe-Zap Index shows a variation of only 0.16 percent in the last month. This is the lowest percentage achieved in the history of the index, which calculates real estate prices based on apartments on offer since 2008.
Regarding rental prices the index has even registered a decrease in prices of 0.9 percent in November in comparison to last month. This is the fourth month in a row, where rents have fallen on average in Rio de Janeiro and good news for the city’s middle and lower classes who have struggled with inflation and increasing prices in the city.
In 2014 overall, rents have increased 3.6 percent so far, a rate way below inflation. However, purchase prices increased by 7.1 percent.