Brazil Building As Fast As They Can
Strong Demand For Homes in Brazil
Brazil’s newfound economic stability and changes in lending laws are for the first time making it possible for the country’s working poor to buy their own homes. And using money that has been pouring in from foreigners who sense a lucrative investment — $4.8 billion since September 2005 — the country’s construction and real estate companies are building as fast as they can. Although changes are sweeping through the industry, the biggest are evident in the market for houses and apartments intended for Brazilians earning up to five times the monthly minimum wage of 380 reais ($198). For years, Brazil’s poor had little access to credit. And even if they could get credit, they could not hope to meet interest rates that were frequently among the highest in the world. That, combined with unemployment and underemployment, low pay and the instability brought on by regular economic crises, explain the explosion of favelas, the shantytowns scattered in and around Brazil’s urban centers.
Since Luiz Inácio Lula da Silva became president in 2003, interest rates have tumbled to 12% from 25% and appear set to continue falling. Inflation was 3.1% last year and is well under control. And both the minimum wage and workers’ salaries are rising at rates exceeding the cost of living, according to government figures, meaning workers have more disposable income. Buying a small home is finally a real possibility for many Brazilians. Brazil’s construction firms are using the huge new investment by foreigners to help meet the growing demand. The country’s biggest mortgage financier, the government-run Caixa Econômica Federal, estimates that Brazil needs 7.9 million new homes.
