Rent prices for housing in Costa Rica continue to rise, showing no signs of slowing down despite a drop in inflation. A recent analysis by the Center for Financial and Real Estate Business Studies (CENFI) reveals that rental costs remain high.

The Institute of National Statistics and Censuses (INEC) reported a negative 2.24% year-on-year inflation rate in September 2023. However, during the same month, the housing rental index, which measures changes in the housing rental market (demand versus supply), showed a 5.74% annual increase. This increase is relatively higher than the 3.17% reported in September of the previous year.

The data indicates that individuals entering the housing rental market for the first time, those with expiring rental contracts (typically renewed every three years), and those seeking new rental properties are encountering prices approximately 5.74% higher than those recorded in September of the previous year.

For instance, if a family rented a house for ₡250,000 per month in September 2022, and they are now searching for another house to rent in a similar area, they will find that rental prices have increased by approximately ₡14,337 per month. This means they would start paying a new monthly rental fee, whether for their existing contract or a new one, of around ₡264,337.

Economist Melizandro Quirós, the executive director of CENFI, explained that there are no clear signs of rental price decreases, confirming their hypothesis that there is strong demand for rental housing while the supply remains limited.

The lack of significant signs of deceleration in housing rental prices, despite falling inflation, could be due to ongoing pressure for price increases in the rental market, in this case, 5.74%. This reflects a higher demand than supply for this type of housing, affecting those entering the rental market for the first time or those with expiring rental contracts.

Additionally, part of the rental increase may be due to adjustments that were not applied during the same month of the previous year, and were instead negotiated as additional hikes in 2023.

The 5.74% year-on-year increase in September this year affects lower-income population quintiles I, II, and III, with monthly incomes ranging from ₡250,000 to ₡750,000 and who do not have access to mortgage financing.

According to CENFI’s analysis, the rental housing prices are projected to increase by an annual rate of 6.35% by the end of December. This percentage is based on the 5.74% recorded in September, plus an expected 0.54% increase between October and December 2023. The calculation considers the ongoing monthly increase with a minimum value of 0.18% for the rest of this year.

In Costa Rica, it is estimated that 315,222 households rent housing, primarily younger individuals. Last year, the number of families renting housing in the country increased by 225,226, with the rental rate rising from 17.46% to over 18%. Families in the second quintile, with an average monthly income of ₡433,789, are among those who most frequently opt for renting.