Market Update Jan 2011

Written by on January 26, 2011. Posted in Uncategorised

Minha Casa, Minha Vida – the changing face of the Brazilian Real Estate Market

With the advent of the government-backed social housing programme, the face of real estate in Brazil has been transformed.

The massive investment in Brazilian property, accelerated by the Minha Vida, Minha Casa programme, has boosted the construction industry to unprecedented levels. The drive to build 3 million homes by the end of 2014 has changed the dynamics of the Brazilian property market.

High prices and lack of available property meant that in 2005, the average Brazilian family needed ten times the minimum wage in order to buy a property priced at R$60,000.

The introduction of Minha Casa, Minha Vida means that a Brazilian household needs just three times the minimum wage to purchase a R$83,000 home. Minha Casa, Minha Vida is running slightly behind schedule and has not quite reached its target of constructing 1 million homes in 2010. Brazil’s new President, first female Brazilian president Dilma Rousseff, is totally committed to the Minha Casa, Minha Vida project and has 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 devastating floods in the Rio de Janeiro district.

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 indicated that it may ease the price restrictions for properties in the programme to allow more middle class Brazilians to enter the market.

In cities with a population over 1 million the maximum price for a Minha Casa, Minha Vida property is currently R$130,000. The government plans to increase this to between R$150,000 and R$170,000. For smaller cities, the current price limit of R$100,000 will be raised to R$130,000. This measure, to be confirmed by the end of this month, should allow the influx of thousands more potential home-owners into the Brazilian real estate market.

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