JUNE 2011 |
www.opp.org.uk
SOCIAL HOUSING Fact:
Brazil is getting safer. In 1997, the homicide rate in Sao Paulo stood at 54.6 per 100,000 residents. By 2007 the figure had dropped to 19.1 and it has continued to fall (source: Instituto Sangari).
a government contribution of 4,000 Reais, which secured a mortgage with a local bank. She has to pay 680 Reais a month for twenty years. Without My House My Life, Michele doubts that she and her husband could have got their feet on the fi rst rung of the property ladder. “Life’s better when you own your own place,” says Michele. It makes it easier to think about starting a family. And this house” – she gestures at a neat, tiled front porch with room for a car – “doesn’t have to be forever, we can sell it one day and get a bigger home”. My House My Life is changing
Valparaíso de Goiás beyond all recognition. Developers started with small groups of homes, testing the market. Today, things are really taking off. The My House My Life initiative is challenging the commonly held perception that it is diffi cult to buy your fi rst home and break the cycle of either renting, or living in informal housing. It is a cultural thing too – Brazil’s big cities are ringed by slums, which generally do not offer the benefi t of title. To qualify, individuals and couples must have income (joint, in the case of couples) of no more than 4,900 Reais. The maximum value of homes that can be fi nanced under the programme varies a little from region to region; in Valparaíso de Goiás it has been set at 170,000 Reais (£51,000). Has My House My Life been a
success? The programme works smoothly and, in its fi rst 18 months of operations helped 278,892 Brazilian families to become homeowners, according to a report by Brazil’s national audit authority. The ultimate target of the programme is to build a million new homes, which in turn will cut the country’s housing shortfall by 14%. Of these, 400,000 are earmarked
for the poorest sections of Brazilian society – families earning up to three minimum wages. It even has an environmental advantage: many new homes come with solar panels and all units built under the programme are to use timber from approved sources to counter deforestation.
The rise in family incomes due to increases in wages, pensions and a range of welfare benefi ts has allowed almost 30 million Brazilians to become socially mobile in the past decade. Most have altered their consumption patterns as a result: sales of cars have doubled over the past decade, as have sales of large consumer durables (washing machines, for instance). The number of mobile phones in the country is now greater than the population. The Government also has a “Bolsa Familia” subsidy to encourage poor families to send their children to school and to make sure that the kids are up-to-date with their vaccinations. The grants are a huge help. Payments of a maximum of 200 Reais (£60) are received by 12.9 million families. Remarkably, the shift to electronic delivery of the Bolsa Familia grants has meant that the cost of administering the programme has been cut from 14.7%
to just 2.6% of the value of the grants dispersed and it is another income stream for families moving into the social housing sector. Remarkably, too, a recent study by Brazilian airline Gol showed that a full half of all its passengers now belong to social class “C”. A generation ago, fl ying in Brazil had been just for the wealthy.
Meanwhile, the number of Brazilians in social classes “D” and “E”, many of whom live in shanty towns, has fallen
“Sales of cars in Brazil have doubled over the past decade, as have sales of large consumer durables”
from 48% to 33% over the same period. “This all adds up to a very positive message for overseas property investors,” says Mark Jeffery, director of Origen Private Equity Ltd, an investment boutique run by Jeffery and his partner David Palumbo. “There is a massive, pent-up demand for new homes. The country’s population is young and still growing. At the same time, the fi nancial services sector in Brazil is maturing.
BRAZIL REPORT | 57
The huge number of credit cards now in use has not only boosted GDP, it also means that about 80 million Brazilians now have bank accounts, which are essential for mortgages.” From a very low base, home loans are taking off in Brazil. The Banco de Brasil, the fi fth biggest in the country, has contracted mortgages worth 4 billion Reais, up 107% in the past year. Its vice-president expects the volume to reach 7 billion Reais by year-end. In the north-eastern coastal city of Natal, founded on Christmas Day in 1599, there is excitement in the air. Natal will be one of the 12 host cities of the 2014 football World Cup finals, and a long-awaited public investment programme in infrastructure is underway: new roads are being built and existing ones repaired, upgrades to public transport and improvements in waste treatment facilities are taking place. The harbour of this city of just over 800,000 residents will also be dredged to accommodate larger cruise ships. What’s more, a new airport is being built in Natal to capitalise on the city’s proximity to Europe – no Brazilian city will be closer. And, when complete, it
An overview | of Brazil’s My House My Life housing programme reveals massive progress and a 15% decline in shanty towns
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