INCC, which corrects property in the plan, has a new calculation – 06/21/2023 – Market

The FGV Ibre (Brazilian Institute of Economics of the Getulio Vargas Foundation) announced this Wednesday (21) changes in the calculation of the INCC (National Construction Cost Index), an important indicator for monitoring the behavior of the real estate market and civil construction in Brazil .

The INCC is used to adjust the value of the installments of those who buy a financed property in the plant during the period in which the property is under construction. Afterwards, the financing is done directly with the bank.

As of July, the weightings of the new INCC will be presented in three construction standards: economic, medium and high. The analyzed materials also change and will be arranged in new nomenclature and hierarchy. The review of the methodology, says the institute, will serve to monitor changes in the cost structure of civil construction. The last change was made in 2009.

According to André Furtado Braz, from FGV Ibre, construction companies will be able to consult the INCC of their construction standard (whether it is high standard or medium standard, for example), using the indicator with “more comfort” to capture the evolution of construction costs . The expansion of the index includes the management of social housing projects, such as Minha Casa, Minha Vida, which today represents a large part of sales in the construction sector.

The new composition is based on budgets provided by major builders on the national scene, according to the institute. These budgets correspond to residential projects executed between 2018 and 2022.

In the current version of the index, there are 52 sub-items, of which 11 are related to labor. With the new calculation, the items with lesser representation in the total cost of the works were eliminated or grouped. Now there are 79 types of material, equipment and service, including 19 relevant labor categories.

According to FGV Ibre, the separation of budgets by construction standard revealed differences in the weight of materials and equipment between constructions of different standards and technologies, depending on the public for which the development is intended.

Weights of construction standards at INCC

Standards	Weights
Economical (Eco)	33%
Medium (Medium)	41%
high (alt)	26%

The geographic scope of the INCC will be maintained. The national index will continue to include seven cities: São Paulo, Rio de Janeiro, Belo Horizonte, Recife, Salvador, Porto Alegre and Brasília, each accounting for a portion of the INCC. These weights were obtained from the IBGE Regional Accounts and reflect, according to GDP, the share of civil construction in the states where these municipalities are located.

Weights of the capitals in the INCC

Cities	Current INCC	INCC New
Recife	5.24	3.81
savior	9.31	7.84
Belo Horizonte	11.13	16.16
Rio de Janeiro	9.49	14.27
São Paulo	43.29	44.51
Porto Alegre	11.04	10.54
Brasilia	10.5	2.87
Brazil	100	100

The INCC was one of the first indices developed to monitor the evolution of construction costs in Brazil. Created in 1944, it has established itself as one of the most important price indicators for the segment, and is also one of the components of the IGP (General Price Index) of FGV Ibre.