Housing Markets in Brazil: Recent Trends and Governmental Responses to the 2008 Crisis

Abstract

In accordance with global trends, the Brazilian formal housing market experienced huge growth from 2005 to October 2008. This growth might be explained by several factors: changes in the law regarding property rights issued by the Federal Government; changes in Central Bank regulation of the use of resources from the special housing finance system; a positive economic climate ensured by economic growth and a gradual decrease in interest rates. Another important issue is the fact that several big property companies have obtained fresh money on the stock market and developed strategies for broadening their market shares, by geographical dispersion and also by diversification of their portfolios, offering products for high-, middle- and low-income groups. As a reflection of the global crisis, some indicators show that the housing market has undergone change since October 2008: home sales as well as the shares of the companies that have opened their capital have been declining. Nevertheless, considering that the special system in Brazil for housing finance has not fully adopted the American model, that is, based on securitisation of mortgage lending, and also, in view of the fact that the Brazilian economy has not been so deeply affected by the global crisis, it seems that the housing market still has the potential to overcome the bad times. Moreover, in order to face the global crisis, the Brazilian government has proposed a new economic plan in an attempt to induce growth by subsidies for social housing that will be produced by private enterprise. This paper aims to present and discuss some specific aspects that could explain why the international crisis appears not to have had the same consequences for the housing market in Brazil as those observed in other countries.