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Minha Casa Minha Vida

Property investment is a universal dream. And it's also one that is about to come true for millions of Brazilian families. Thanks to the government social housing programme, Brazil will see 3 million low-cost properties built by the end of 2014.

The Minha Casa Minha Vida (My Home, My Life) programme was launched just over a year ago. With the slogan "homes for families, wages for workers and development for Brazil" and a budget of R$105.7 billion, the project has the ambitious aim to reduce the shortage of property in Brazil for low-income families by over 40%.

For the millions of Brazilians whose double obstacle of low wages and lack of housing means they cannot get a foot on the property ladder, Minha Casa Minha Vida "will be a dream come true". The investment in 3 million properties in Brazil will provide 800,000 homes for families earning between zero and three times the minimum monthly wage (currently R$465). A further 800,000 houses will be built for families with salaries between three and six times the minimum wage in Brazil and 400,000 properties are allocated for families whose wages come between six and ten times the minimum wage.

Financing for this investment in property in Brazil comes from the government-owned Caixa bank. As sole financier for this massive project, Caixa provides funds for developers and mortgages for homeowners. For the buyer, mortgage terms are exceptionally favourable - for example, 100% finance is available for up to 30 years and interest rates for Brazilians earning up to 5 times the minimum wage come in at 5% (the current rate is 8.75%).

Mortgage payments are guaranteed for up to 36 months if new homeowners are unable to meet their monthly payments because of unemployment. Qualifying families are also eligible for exemptions or reductions on property taxes in Brazil.

The programme has been extremely popular and thousands of families throughout Brazil are putting their names down for a slice of the new low-cost housing. Unsurprisingly, Minha Casa Minha Vida projects in many parts of Brazil are heavily over-subscribed.

The impact on the Brazil construction industry is expected to be huge. Developers and building companies have the incentive of lower taxes on construction materials. The government has reduced taxation on a list of 30 materials used in construction to encourage real estate companies in Brazil to take on Minha Casa Minha Vida projects.

Social housing has been largely overlooked by property investment, most of which has preferred to focus on high or middle-end developments. With the advent of Minha Casa Minha Vida, this may change. According to the A.T. Kearney report, Recovering Markets, Revised Ambitions, "low-cost housing is a new frontier for developers in many emerging markets". The report finds that social housing "represents the vast majority of needs in emerging markets".

Low-cost housing programmes have a history of success. Schemes such as Phenix in France in the 1950s, MDC in the US in the 1970s and Preuksa in Thailand in the 1990s all provided homes for thousands. Minha Casa Minha Vida is fast following suit.

Described by the Brazil real estate giant, Gafisa as "one of the undoubted highlights of 2009 in the real estate sector", Minha Casa Minha Vida provides unique opportunities for millions. And not only homeowners, but also developers and builders stand to reap huge benefits from this massive Brazil property investment scheme.

 

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