Get started
Work

The Brazilian Housing Liquidity Index: Measuring the Ability to Transact in Brazil's Residential Market

Year: 2026
Type: article
Abstract: Radar Perene Working Paper Series, No. RPWP-004 · Version 1.0 · July 2026 House price indices are the most visible statistic produced about any residential market, and in Brazil they are effectively the only statistic most observers ever see. Yet price answers a narrow question — at what level did the marginal transaction clear — and remains silent on a question that matters at least as much to households, lenders, and researchers: whether a transaction can be completed at all, in reasonable time, at reasonable cost of financing. A housing market can reprice and freeze simultaneously. Between 2014 and 2016, Brazilian residential prices drifted slowly in nominal terms while mortgage concessions collapsed, financed transaction volumes contracted, and the effective ability of an ordinary household to buy or sell a property deteriorated dramatically. No widely published Brazilian statistic captured that deterioration as a single, interpretable number. This paper documents the Brazilian Housing Liquidity Index (Índice de Liquidez Imobiliária, ILI), a monthly composite that measures the ability to transact in Brazil's residential market rather than the price at which transactions clear. The index aggregates eight components organized into four pillars — credit conditions, market pricing (rental yield relative to long real rates), transaction activity, and credit stress — built from public institutional data: Central Bank of Brazil statistical series, FipeZap price and rent indices, ABECIP financed-transaction data, and the market real-rate curve. A fifth pillar covering supply and construction is a disclosed, planned extension. Components are normalized by full-sample percentile rank — a declared in-sample limitation — and aggregated to a 0–100 scale read through five bands, from frozen (0–20) to euphoria (80–100). The production composite is monthly since January 2014, with approximately 149 observations through May 2026, verified against the production database as of July 2026 (latest reading: 52.0, "balanced"); underlying inputs reach back to 2011 and earlier. Validation is descriptive and deliberately modest, computed on the ~147-month research-prototype sample, whose vintage and joint-availability rules differed from the production series: the index's Spearman correlation with forward FipeZap price changes rises with horizon, from approximately +0.54 at three months to +0.63 at twelve months, consistent with — though not by itself establishing — the view that liquidity conditions lead prices; forward six-month outcomes bucketed by index level show monotonic separation in both frequency and median of subsequent nominal price changes. The sample contains only about twelve independent twelve-month windows, so these statistics are treated as descriptive rather than inferential. The index is experimental, standalone, and display-only by internal doctrine: it does not feed the Radar Perene regime engines and will not until it passes a defined validation gate. The index is a descriptive instrument for reading the state of housing-market liquidity within its own history; it is not a forecast of prices, not a market-timing signal, and not investment advice. This is a living document: future versions may expand datasets, validation procedures and historical coverage without changing the conceptual foundations. All validation statistics were verified against the Radar Perene production database as of July 2026. The concept DOI (10.5281/zenodo.21327629) always resolves to the latest version.
DOI: 10.5281/zenodo.21327629
Language: English
Open Access status: green
OpenAlex ID: W7168178578
FWCI:
Cites:
Cited by:
Related to: