News Releases

Jan 24, 2013

Sense of security affects residential property values in metropolitan areas in Brazil

A greater sense of security can result in an increase in the average value of properties in metropolitan areas in Brazil of up to US$741, for a total increased value exceeding $13 billion calculated for all 18 million households in these areas.

This was the central finding of the study "The impact of sense of security on residential real estate values in Brazilian metropolitan areas,” which was commissioned by the Institutional Capacity of the State Division of the Inter-American Development Bank (IDB).

The fear of being the victim of any kind of violence has been recognized as a significant social problem. The study’s results provide evidence of one aspect of the cost of violence, which up to now has not been demonstrated in concrete form.

According to the study’s coordinator, David Vetter, most previous analyses focused on crime rates filed with the police and their relationship with the price of residences. "Our study sought to assess not only the impact of these rates, but also the impact of residents’ sense of security on the value of residential property,” he said. “Our data includes the fear of becoming a victim."

The study, which includes the metropolitan areas of Belém, Fortaleza, Recife, Salvador, Belo Horizonte, Curitiba, Porto Alegre, and the Federal District, shows a significant relationship between the monthly rent and the sense of security in the home.The increase in the average value of properties is explained partly by security measures adopted by families with higher incomes.

According to the study, these wealthier families tend to feel safer at home, even if their homes are preferred targets for burglaries and thefts.This finding raises a paradox: Neighborhoods with a greater sense of security are precisely those subject to the highest rates of victimization.

The study analyzes residential rents using a hedonic model that considers factors independent of the characteristics of the property itself, such as local crime indicators, pollution, urban services, and contractual conditions, among others. It relates the data on rents to statistics on crime and violence and to data from the National Household Sampling Survey of 2009 produced by the Brazilian Institute of Geography and Statistics.

Citizen security

The IDB has invested significant resources in identifying the true impact of crime and violence on development in Latin America and the Caribbean. In addition to the direct economic costs, the Bank attempts to identify indirect costs, which are relevant for planning strategic prevention and corrective measures.

This study was part of a call for proposal to experts and academics to present new ways of measuring the cost of crime. The IDB believes that knowledge is the first step in implementing effective policies for combating crime and violence.

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