Brazil and it's housing market

Brazil is a country with many riches, it has abundant natural resources and in recent years it has been going through rapid economic and industrial Development but one area it needs to greatly improve is its housing sector. Currently it's estimated that Brazil has a housing deficit of between 6 to 8 million units and as each year about 1.5 million households are created then an increase in the building needs to happen;  currently Brazil only builds on average 750 000 units per year. Of this 6 to 8 million deficit it’s estimated that up to 90% of the deficit are at the low income end of the population who badly need housing. To meet the deficit in housing demand the government and local administrations have set up affordable housing schemes to provide finance and to ensure an adequate building program is in place.

There are three main issues which are seen as drivers for demand in housing; economic growth, rapid urbanization and population growth. With the economic growth in Brazil comes massive infrastructure spending and therefore increased demand for housing both for buying and renting, the wealthier Brazilian become then greater demand for housing. Brazil as well many other growth markets are going through a quick redistribution of its population with the population moving from the countryside to urban centers this is creating an ever growing demand for affordable housing in Brazil. In the Bric counties such as Brazil and China and to a lesser extent India the rapid migration to the cities has not been seen before on the globe on this scale since the Industrial revolution in Britain. Population growth is another huge factor to explain the need for more housing, Brazil has a relatively young population of 194 million people which creates a growing demand of 1.5 million new households each year. In fact the Brazil’s population growth rate is nearly double that of the global average and by 2030 its expect that Brazil’s population would of grown by over 54% from today’s total which will mean just below 100 million new families in Brazil. It’s estimated that it will take 10 years for Brazil to catch up and erase its current housing deficit
   
Brazil is currently going through a mortgage boom as the growing wealth of the Brazilian population and emerging middle class look to get onto the property ladder and own their own home. It’s expected that Brazil’s home loan market will grow by 30% in 2012 which is not as much as the 56% record growth in mortgages in 2010. The slowdown in 2011 and 2012 is mostly due to government efforts to slow credit growth and not to allow a credit bubble such as what has happened in the US and some European countries over the last few years. The expected 30% growth in home loans in 2012 is still double that of consumer credit loans. At the top end of the housing market some apartments in Rio are selling for nearly as much as apartments in Manhattan, London and Hong Kong, Cities such as Miami in the US have been experiencing a boom lately in Brazilians buying property there. Another factor that’s led to increased growth in Brazil’s property sector is the two major sporting events Brazil will be hosting the 2014 Football World cup and 2016 Olympic Games which are not only creating local demand but also an increase in International buyers attracted to Brazilian growth opportunities. With a host of International companies setting up operations in Brazil to service the Brazilian and South American markets then this is also increasing the demand for housing at the higher end of the property market as foreign workers seek housing.     

Environmental issues and the sustainable growth of the Brazilian housing stock are issues very important to Brazil and in fact Brazil is in a unique position to accomplish sustainable growth while reducing its housing deficit. This country is on course to build cheap affordable communities to meet the demand of its low income segment of the population while ensuring that is uses the best green build process with the latest environmental technology. Brazil has a history of promoting programs and policies relating to sustainable housing design and construction and maintenance, such as product certification, supply-chain, research and development, and Green Building programs.

Brazil is increasing Construction of housing to meet its every growing demand but this will have to increase further over the 20 next years to ensure adequate housing for all levels of Brazilian society.

Disclaimer: This information has been collected through secondary research and BricPartner is not responsible for any errors.