What the INCC is and how it influences the real estate market

The INCC is the acronym for the National Construction Cost Index and is used to measure changes in the cost of residential properties under construction. For this reason, it is often an important indicator to analyze when buying a property. 

To keep an eye on this index and find out how much it can influence the value of your new property, read on. Below, you'll learn more about what the INCC is and how it affects the real estate construction market. Follow along!

What is the INCC in practice?

The INCC is an index that has existed since 1944 and calculates, based on market data, the variation in the cost of materials, labor, services and equipment used to build housing. It is based on this index that adjustments to the value of properties that are still being built are calculated and used by builders and developers to adjust property prices.

Therefore, when you buy a property on the drawing board, the company responsible for its construction uses the money of those who are already paying to build it. As this type of work can take years, it is normal for costs based on the volatility of the index to be adjusted over this period and passed on to buyers.

Does the INCC have much influence on the value of the loan?

In order to calculate the INCC value, which is calculated on a monthly basis, research is carried out on the values for the last two months. This survey is carried out in some of the country's capitals, such as Belo Horizonte, São Paulo, Rio de Janeiro, Porto Alegre, Brasília, Recife and Salvador.

Based on this data, you can calculate the volatility of costs and get the index for the month. Normally, the value is no more than 0.5%.

For this reason, the value of the INCC is not considered a crucial factor in giving up on the purchase of a property, since it is not a very heavy index for those who have opted for financing.

Despite this, it's very important to know about this rate and how it will affect your installments over the course of the loan, so that there are no surprises over the time you pay for your property. This way, you can add this rate to your financial planning, as an estimated average, so that you can organize yourself.

How is the INCC calculated in the installments?

In practice, the INCC should be calculated as follows:

If you want to calculate the INCC for the March installment, for example, write down the INCC for the previous two months, February and January. Then multiply the percentage of the index by the total balance you have paid in installments. Then divide this result by the number of installments left to pay. That way, you'll have an idea of how much it will affect the value of your property each month.

Now that you know what the INCC is and how to calculate its value in the installments, it's also important to remember the importance of planning financially to pay for your property. Remember that interest rates and other fees are also part of this calculation, so you can fit the installments into your budget without any negative surprises in the future.

Looking to buy a property? Find out here How to save for your first apartment!