After a decade of rising home prices in Rio de Janeiro – in some cases by up to 700% – the era of increasing valuations seems to be coming to an end, says housing agency Secovi-RJ. According to the survey “Overview of the Real Estate Market in Rio de Janeiro,” (Panorama do Mercado Imobiliário do Rio de Janeiro) the year of 2011 was marked by the stabilization of prices, with a slight upward trend. Still according to the study, an unprecedented real estate price appreciation in Rio took place between 2001 and 2010, when prices of residential and commercial properties rose by as much as 400% and 700%, respectively.

Wait, don’t celebrate just yet…

For Secovi’s vice president Maria Teresa Dias, “prices tend to stabilize, but will not go down.” She explains that the sharp rise in the last decade was due to the inertia of the sector (pent-up demand) in previous years. “The housing market stayed frozen for about 20 years years before the resumption of growth,” she says.

Sales and rentals ​​decelerate…

From January to December 2010, the average square meter of properties for sale rose 42.1% over 2009. For the same period in 2011, this value increased 15.8% compared to 2010, less than half of the rates reached earlier. With respect to properties for rent, the average square meter grew 29.1% in 2010 compared to 2009, while in 2011 this appreciation has slowed to 16.1%, almost half of that recorded in 2010.

Despite the price deceleration, Dias doesn’t believe that there will be a property price decline, even after the 2016 Olympics. “I find it difficult to happen. The strong improvement occurred because the market has been asleep for a long time. The prices were simply brought back to reflect the actual values.”

Rio de Janeiro mayor says “these prices are crazy” …

The mayor of Rio, Eduardo Paes, who attended the study presentation said that the appreciation of property prices in Rio was “totally crazy”. “I don’t know if you (Secovi-RJ) will say that prices will continue to appreciate. We expect prices to decrease, the market needs to calm down for a bit. It is not acceptable. It’s something crazy,” said Paes.

“It is not madness, it is reality,” said Maria Teresa Dias, the research coordinator, commenting on the speech of the mayor. “We were stuck for many years. Many of these prices will still rise to reach their maximum value, although the vast majority have now stabilized,” she added.

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