Rental prices soar after ‘generous’ deals during pandemic; understand

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Resumption of demand and renegotiations below inflation became the driving force behind the latest readjustments; FipeZap index points to an increase of 17.05% in rental prices in the accumulated 12 months. The party is over: average rental prices in Brazil have skyrocketed in recent months. Data released by the latest FipeZap Index show that average rental prices in Brazil rose 1.61% in February, the eighth consecutive increase. In 12 months, the accumulated high is 17.05%. The scenario, according to specialists, reflects a series of factors, such as: A “recomposition of prices” after softer negotiations during the pandemic; The variation of rent indexes; Greater demand for well-located rental properties — especially amid people returning to business centers; According to the indicator, all 11 evaluated capitals registered an increase in the month, with emphasis on Florianópolis (SC) and Goiânia (GO), which had advances of more than 4% in the period. In 12 months, these two capitals accumulate increases of 33.36% and 31.23%. See more details below. Understand what has pushed up rent prices in Brazil and what we can expect ahead: Price recomposition after the pandemic According to specialists, most of the increases seen in recent months are due to a price recomposition on the part of property owners after the pandemic — which, at that time, allowed the maintenance of rent in contracts or chose to make adjustments at a discount. “Precisely because there were a lot of people whose income was impacted during Covid-19, the owners carried out a strong negotiation exercise so that the occupancy of the property was maintained at that moment”, says the director of risk and governance at Lello Imóveis, Moira Toledo. “So now, that we are experiencing a reopening of the economy and we have a slightly better situation, it is natural that landlords who stayed all this time without changing prices or with a readjustment below the market average wanted to resume rental prices”, he adds. . Variation in rent indexes Still according to specialists, another explanation for the increase in rents is the variation in some price indices. That’s because, during the pandemic, part of the negotiations was also to exchange the traditional General Price Index – Market (IGP-M, also known as “rent inflation”) for the Extended National Consumer Price Index (IPCA, the official inflation of the country) as an index in new contracts. In the most critical moments of the pandemic in 2021, for example, the IGP-M accumulated a positive variation of more than 37%, pressured by high commodity prices and the advance of wholesale inflation. “Many owners who had their contracts indexed to the IGP-M way back, chose to replace the index with the IPCA”, explains QuintoAndar data specialist, Pedro Capetti, reiterating that in addition to the fact that the official inflation indicator was lower at that time, it also ends up being what most reflects the prices of what Brazilians consume. Capetti also points out that, with that, QuintoAndar also opted to adopt the change, making contracts indexed to the IPCA the company’s standard. “Now, most contracts signed at QuintoAndar are indexed by the IPCA”, he adds. According to specialists, this preference for contracts indexed by the country’s official inflation also helps to explain the current moment of price increase — since while the IPCA accumulates an increase of 5.60% in the 12 months until February of this year, the IGP- M has a positive variation of 1.86% in the same period. “This also ends up being an incentive for the owner to pass on prices to the landlord. When inflation rises and it hits his income [do proprietário], he often tries to replace it in the rent”, evaluates DataZAP+ economist Pedro Henrique Tenório. More expensive rent drives demand for smaller apartments Greater demand for properties available for lease Finally, another factor that explains the recent advances in rent prices is the natural dynamics of supply and demand. According to experts, in addition to greater demand, characteristic of the beginning of the year — a period when many contracts expire and there is an increase in demand for properties available for lease — there is also a greater flow of people looking for properties close to large centers commercials. “When remote work was stronger and the home office prevailed, larger spaces and those farther from city centers were more sought after. Now, these people are starting to return to face-to-face work and the distance and the longer commute time are starting to bother us”, explains Toledo, from Lello Imóveis. In this sense, data from the QuintoAndar de Aluguel Index, for example, point to a 2.93% rise in prices in São Paulo in February, the 20th consecutive increase and the biggest monthly advance since 2019. The indicator also pointed out that there was an increase of rent in more than 90% of Rio de Janeiro’s neighborhoods in the period. According to Capetti, a data specialist at the company, this movement is also reflected in the profile of properties sought after. “In São Paulo, for example, we saw a strong increase in the search for so-called microapartments, which are smaller and well-located launches, built on axis roads and close to bus lanes and public transport,” he says. As for Toledo, from Lello, this scenario opens up space for the sector to evaluate a new master plan, which covers enterprises seen as “medium”, with two bedrooms and two parking spaces. “In the last two years we had many larger apartment launches in some parts of the city and, now, we need to make possible a constructive potential that meets the new demands, so that we can think about the concept of ’15-minute cities’, which encourages less commuting. people to work and moves local businesses”, he says. Perspectives ahead Despite the recent increases seen in rental prices, specialists indicate that the expectation is for a slowdown over the next few months. Part of this movement, they say, should reflect the slowdown in Brazilian activity itself, with more moderate impulses in the economy and a weaker job market. “There are several economic factors linked to the Selic [taxa básica de juros], the global and Brazilian economy and also the real estate market itself that need to be considered. But we believe that the sector has already recovered most of the pandemic discounts and the trend is for a more modest price increase in 2023”, says Capetti. For Tenório, from DataZAP+, this deceleration movement should be gradual. “It will also depend on what we are going to see from monetary policy and how much this should be reflected in a drop in inflation. I believe that we will see reflections of this scenario later this year, but more for the second half”, adds the economist. Recent government announcements about housing programs for low-income families are also on the radar, as well as possible bills aimed at the real estate sector. “What worries me are the bills that want to put an end to evictions or increase the leasing tax, or on service providers in the segment, which are real estate administrators. The investor does the math and all this can discourage investment in the sector”, says Toledo. “It is important that there is no intervention by the public authorities and the judiciary in the leasing industry, because this market is already mature enough to carry out negotiations and balance itself out. It is important that this freedom [de negociação] be maintained so that the market attracts investments from the private sector which, ultimately, is also what protects the tenant”, adds the director of Lello.

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