Property prices in Brazil reach highest on record

Property prices in Brazil reach highest on record

On the back of high demand and huge interest from investors, property prices in Brazil reached their highest ever last year. They rose across the board by 6.16%, the most significant year-on-year increase since records began and ahead of the inflation rate. Many of the country’s largest cities saw double-digit increases. 

Biggest uptick ever 

The latest index for property prices in Brazil, FipeZap+, reports that house values increased by 6.16% in 2022. The rise brings the average square metre in Brazil to R$8,321.

The figure is the highest since 2014 when it reached 6.7%. Furthermore, it exceeds the national inflation rate, at 5.79% last year. 

The FipeZap+ index looks at property prices in the 50 biggest cities in Brazil as advertised on online portals. It only includes apartments, so single-family homes don’t form part of the statistics. 

Larger increases in many cities 

Several state capitals experienced double-digit price rises last year, with two at over 20%. They were Victoria, the capital of Espiritu Santo (up 23.23%), and Goiania, with a rise of 20.91%. Coastal capitals also saw significant increases, such as Florianópolis (up 11.33%) and Fortaleza (up 8.29%). 

At the other end of the scale stood Brazil’s largest cities, where house prices rose below inflation. For example, in Brasilia, they went up by just 1.31% and in Rio de Janeiro by 2.2%. In Sao Paulo, the increase stood in line with the inflation rate (up 5.06%). 

Most expensive property in Brazil 

The FipeZap+ index also ranks prices for property throughout Brazil and finds that in 2022, the most expensive real estate was in Balneario Camboriu in the state of Santa Catalina. Here, the average square metre rose to US$11,447. 

Victoria in Espiritu Santo stood in second place with property prices of R$10,481, followed by Itapema at R$10,303. The most expensive property in Sao Paulo cost an average of R$10,196, with Rio de Janeiro slightly below at R$9,860. 

Reasons behind the increase 

Analysts attribute the latest rises in property prices in Brazil to three main factors: 

High demand – this remains pent up after the pandemic and is exacerbated by the acute supply shortage. Analysts say this trend will continue during 2023.

Investment interest – Brazilian real estate continues to grow in popularity among investors, both Brazilian and international. Dollar buyers have enjoyed particularly favourable prices over the last few years. 

Rise in construction costs – this increase inevitably passes to the end product and pushes prices higher. According to the National Index of Construction Prices (INCC in Brazil), building materials went up by 9.28% in 2022. This uptick was, however, considerably below 2021, when they rose by 13%. 

(Source: FipeZap)