Characteristics of the Housing Market in a Developing Country: the case of Brazil

Parallel Session I8 With 8,500,000 square kilometers, Brazil is the fifth largest country in the world, and the largest nation in Latin American. According to the 2010 Census, Brazilian population in 2010 is estimated as 190,700 million inhabitants, constituting 67.550 million households, 84 percent living in urban areas. With a GDP of over US$2 trillion, Brazil is the worldís eighth biggest economy. Per capita income is US$11,000; however, this average might be misleading as Brazil has been well known for the unevenness of its income distribution. According to the U.S. Central Intelligence Agencyís World Factbook (CIA), amongst 134 countries Brazil ranks the tenth in the Gini index of family income distribution, meaning that only nine among all countries have more skewed distribution. Yet, in 2007, the highest 10 percent of Brazilian households received 43 percent of the national income, while the lowest 10 percent received only 1.1 percent. Only 1.7 percent of the families had a monthly income that was equal to more than 10 minimum wages in 2007 (US$1,974 in 2007).The quality of the housing stock is probably the most conspicuous evidence of the distribution of income in any society. Yet, family income distribution is at the core of Brazilian housing conditions, with an historic accumulated deficit, estimated in 7.9 million dwellings in 2005, mostly for families with monthly incomes below US$200, the condition of 78.5 percent of Brazilian families. Families that live in inadequate dwellings (slums, tenements, improvised dwellings, excess density dwelling, lack of infrastructure, inadequate titling, lack of exclusive bathrooms, or high-depreciate building) represent 45 percent of this deficit. The other 55 percent is composed of families sharing the same dwelling with one or more other families, a housing arrangement that is characteristic of countries in development. From the demographics point of view, there has been strong pressure over housing demand. The country doesnít have a younger profile population anymore; now, it has a predominance of adults. The estimated population aged between 25 and 64 years, where the housing demand is concentrated, is expected to grow from 43.4 million (36.6 percent) in 1980 to 112.6 million (54 percent) in 2020. This means that, if in the 1980s, 920 thousand households were formed each year, it is expected that more than 1.2 million new households per year will be formed in the decade of 2010.Present Brazilian demand for mortgages and formal housing production is concentrated in 5 to 10 minimum wages monthly family income bracket, which means 8.4 percent of the total families. A major purpose of the presentation is to identify, whenever possible, major differences with Europe.