Brazil’s Housing Shortage
By David Garner – Managing Partner, David Garner Consulting
After the re-election of President Lula in 2002, Brazil’s government introduced a “growth-acceleration package”, a set of reforms including US$236 billion worth of housing and infrastructure investments to b put in place over the next four years. Despite the global economic crisis, the Brazilian government is still continuing to address the housing shortage in Brazil, estimated to be a shortfall of some 7.5 million houses.
Around 162 million Brazilians live in urban areas, equating to around 83% of the population. Sao Paolo’s metropolitan area has a population of more than 27 million, and in of Rio De Janeiro (state), there are more than 15 million residents.
It is estimated that about one-third of Rio’s population lives in favelas – self constructed squatter towns on the outskirts of the city. In Sao Paolo; perhaps 40% of the cities’ population lives in these squatter settlements.
Home ownership is very high at 75%, and only about 14% of the 42 million properties are rented. Leaving a large space in the market for landlords. Around 85% of all homeowners live in low quality, self-built, single-room housing units, again indicating a fantastic opportunity, as demand for better quality housing in the super economic sector is huge as wages increase (the national minimum wage has increased by more than 50%) and more people exit poverty. In 2008 6 million Brazilian left poverty.