RIO DE JANEIRO, BRAZIL – The world has watched as the real estate market across Brazil experienced a dramatic increase over the past five years, especially in Rio de Janeiro. Despite figures showing signs of leveling off in 2013 and fears of a devaluation, with the high tourist season returning – followed by the 2014 World Cup – there is plenty of optimism for investors to be found.

The majority of caution in the Brazilian housing market ‘bubble’ is manifested in Robert Shiller’s observations, who also predicted the U.S. housing market collapse in 2005.

Yet, Teotonio Rezende, Caixa (Brazil’s second largest government owned bank) vice president of real estate lending who account for two thirds of real estate mortgages, quashed the economic fears by saying that the market is simply readjusting to previous years’ depreciation with the rise and subsequent level-off in prices being purely a part of natural economic forces.

“Between 1984 and 2002, real-estate values depreciated,” Rezende said in an interview in Brasília. “There was economic stagnation, hyperinflation, wage loss, high unemployment. So what we’ve seen since then is a readjustment of prices recovering from that undoing.”

Swedish native living in Rio, Johan Jonsson of Agente Imóvel, also disagrees with warnings of a market is set to burst and told The Rio Times: “The pricing trends are continuing upwards, with a rolling yearly appreciation of seventeen percent for the city of Rio je Janeiro.”

“Although far from the number we saw five years back, this is still among the fastest growing price trends on a global scale, and surpassing the inflation by around ten percent.” He adding that “forty percent of the mortgage applicants of Caixa [government owned bank] are under 35 years of age.”

According to Cristiane Spercel, an analyst at Moody’s Investors Service, the market for property within the middle to upper classes is remaining strong, even though there have been reports of an increasing number of mortgage contract cancellations.

“Cancellations are a red flag and it shows that there are some limitations in the growth model,” Spercel told Bloomberg. “But in our opinion the demand for home acquisition remains robust,” she added.

Even though the market has experienced a recent slowing of rental prices, from June’s 0.2 percent increase compared to a 1.6 percent increase every month in 2012 for example, industry insiders predict plenty of opportunity in 2014 for the Brazilian market.

Some however, are less bullish in the overall market prediction, and James Lomas from Indigo Investments told The Rio Times that: “I think that prices are high enough now although I disagree that there is a bubble,” he explained. “Saying that a lot of people are still expecting to sell their apartments for crazy prices and a lot of property on the market is priced unrealistically.”

Lomas offers some advise for those looking to invest in the short-term. “You have to look harder for good deals. You can still find value in places like Copacabana and Gloria. [Yet] the bottom line is don’t expect to buy an apartment and make a fortune off it now, the big price rises have already happened.”

In terms of what to expect in 2014, he adds, “I think that prices will stay as they are now, fairly static but creeping upwards. I don’t believe there will be a crash or we have a bubble but likewise there will be no upward surge. The World Cup and Olympics may have had some effect but it’s already happened a couple of years ago.”

Still, to help fuel growth, in October Brazil’s National Monetary Council approved an increase in the value of homes that workers can use their FGTS (a government-led unemployment insurance fund) to purchase a home. In Rio, residents can now use the money to help buy a home worth up to R$750,000, reflecting the surge in property values in the city.