Having risen for almost a decade and by up to 700%, house prices in the city of Rio de Janeiro, Brazil, are showing signs of slowing down, according to the Union City Housing.
According to the survey entitled “Overview of the Real Estate Market in Rio de Janeiro” held by that institution, the results of real estate in 2011 compared to 2010 was a stabilization of prices, however, with an upward trend. After the most unprecedented real estate appreciation in the city’s history, values have stabilized but without lowering the level. The significant increase in values in the last decade occurred due to low activity of the real estate in the years before the boom (a period of more than 20 years of inertia).
Other factors that influenced the exacerbated growth were the projects aimed at public safety, such as the Pacification Police Units (UPP acronym in Portuguese) in the slums of the city and the projects aiming at better infrastructure for the city, in areas such as transport (with the expansion of the subway) and sanitation. Many of these projects aim to prepare the City to host two events of great magnitude, namely the FIFA World Cup in 2014 and the Olympic Games in 2016 luxury homes for sale in florida miami.
Despite the substantial growth in the sales value of properties, the value of rents has not kept the same pace. According to the survey, the average price per square foot rose by 42.1% in 2010 while the average rent per square foot rose by 29.1% over the same period.
Despite the slowdown in house prices, Maria Teresa, research coordinator, believes that there will be no retraction in these values, since in her view the growth was due to the long period of stagnation immediately prior.
The Mayor of Rio, Eduardo Paes feels that one of the causes of the increase was the investment of his administration in the city, somewhere in the order of R$ 20 billion (approximately U.S. $ 10 billion). He called this growth as “a crazy thing” and he expects prices to stabilize in order to avoid a housing bubble in the city.
This growth has not been registered only in the city of Rio de Janeiro, but also throughout the State, especially in the north coast, where there is an oil industry is booming (due to discovery of new oil fields around the region) and also in the south of the State due to car companies that have settled in the region since the late 1990s.