Brazil is currently carrying out one of the largest affordable housing programmes in the world. The next phase (3 million additional properties) will further boost the property market in the country as well as creating employment and advancing economic growth.
The Minha Casa Minha Vida (MCMV – My House, My Life) programme was launched in 2009 with the double objective of providing adequate housing for millions of Brazilian families and stimulating the civil construction sector. These aims have so far been fulfilled and five years later, 3.4 million properties have been contracted with over 2 million expected to be handed over to their new owners this year.
In this next phase of MCMV, the government intends to iron out the issues raised during the previous stages and accelerate the construction process. Priority will be given to mid-income families with monthly salaries in the R$1,600 to R$2,300 bracket living in Brazil’s largest cities. The focus of attention will be on cities in the south and southeast where the MCMV programme has not been as far reaching as in other regions like the northeast. Here, the housing programme has been more successful in addressing the needs of mid-income families.
To help this income bracket access a home within the MCMV programme, the government is implementing more favourable lending conditions. In the four months between January and April this year, the Brazilian authorities allocated R$6 billion to mortgage lending subsidies, a significant increase on 2013 when the total for the whole year reached R$7.6 billion.
Mortgage credit in the private sector has also experienced huge growth so far this year. The total lent by Brazilian banks for property purchase during March was the highest for the last two decades. Mortgage lending reached R$8.3 billion in March bringing the total for the quarter to R$25.2 billion, a 24 per cent rise on 2013. However, the Brazilian Mortgage Association (ABECIP) expects the rate to slow down moderately as the year progresses and forecasts that lending will grow by 15 per cent during 2014.
The main reason behind this big first quarter increase is that new units launched two years ago are now reaching completion so buyers are formalising their mortgage contracts. Despite the huge growth in mortgage credit, Brazilian banks remain very cautious in their lending criteria and as a result, the default rate of 1.8 per cent is very low.
Source: ABECIP-Associacao Brasileira das Entidades de Crédito Inmoniliário e Poupanca