Real Estate Fund, Brazil, Asset Management

Affordable Housing truly affordable

by manoj on February 8, 2011

There is no doubt that Dilma will continue Lula’s programme of increasing home ownership, reducing social inequality and social problems such as slums, drugs and crime.

The Minha Casa Minha Vida programme is now beginning to take effect in Brazil as the scale of developing 1m+ houses per year over the next 4 years has boosted the construction sector.

Traditionally property construction was once small scale  with many homes being self build and usually limited to the largest cities. The shortage created a latent demand of 7 million as there was no mortgage market to finance purchases and development finance was expensive and retruns were low. For many Brazilians owing a house remained a dream as 5 years ago the average Brazilian family needed ten times the minimum wage in order to buy a property.

With Minha Casa Minha Vid to buy a home a Brazilian household needs just three times the minimum wage. Hundreds of thousands of families have signed on for and been approved for mortgages to buy their homes at cost effective interest rates which now means the it is almost as cheap for a Brazilian to buy as it is to rent.

As one would expect with such a large programme, (R$34 Billion) the Minha Casa Minha Vida had a slow start due to teething problems as the system could not cope approvals due to a lack of experience and did not hit the mark of 1 million homes in 2010.

Brazil’s new President Dilma Rousseff has shown her socialist credentials and  is totally committed to the Minha Casa Minha Vida and made the social housing programme a top priority for her government. The necessity to build quality housing for millions of Brazilians has been made even more apparent after the recent floods in the Rio de Janeiro district and the need to remove drugs from slums to address Brazil’s social problems.

Last month, the Brazilian government approved this year’s budget for Minha Casa Minha Vida. The amount for 2011 is R$30.6 billion and will go towards the building of many more Minha Casa Minha Vida units. The government has also indicated it will look to ease restrictions to allow more middle class Brazilians to enter the market.

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