Leblon is most expensive place for real estate in Rio, photo by Alexander Shafir (www.shafir.info)

The rate at which average Rio property prices have risen over the past five years is four times greater than that at which average wages have gone up, according to a report by O Globo newspaper.

Industry experts say wealthy Brazilians have encouraged skyrocketing prices, which have outpaced financing options for many and exposed a widening gulf between the richest and the rest.

In January 2008, a square meter of real estate in Rio cost R$3,851 (US$1,975) on average; five years on, it costs 124.2 percent more, R$8,636 (US$4,429). In the same period, the average monthly salary in Rio has increased just 24.2 percent to R$1,902.80 (US$971), according to the IBGE.

As a comparison, online surveys show a square meter in New York City costs approximately US$14,000 (US$1,295 per square foot), with average salaries of around US$4,000.

Renting in Rio has also increased, up over 65 percent on average since 2008 – double the rate at which incomes have increased. Some rents have increased by over 230 percent in Rio’s most sought-after areas.

Industry experts say the boom in prices stems from it being undervalued in the early 2000s and that an overdue “correction upwards” was made, leading to a sharp increase in prices to the present day.

Other factors also stoked prices, including the boom of the petroleum industry, greater access to credit, political stability and a reduction in violence. But it was the prospect of hosting major international events, particularly the 2016 Olympics, that gave many the green light to seek wildly high prices for their property.

Read full article on The Rio Times website.