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Brazilians Bending Over For The Banks

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http://www.bbc.co.uk/news/business-11165640

Cida Duraens and her husband recently bought their very first home - after 22 years of marriage

There is music, drinks, food and smart people, but this is not an ordinary party; it is the launch of yet another real estate development in Sao Paulo, Brazil's largest city.

Continue reading the main story

Related stories

* Boom allows Brazilians a home

* Brazil's consuming desire for status

Construction of the properties that are up for sale has not yet started, and buyers will not get into their new homes for another two years, yet the competition for the best spots is fierce.

When a customer decides to buy, the estate agent has to rush through all the relevant the documents before a competitor closes the deal.

"Last night I didn't have any sleep because we spent all night closing deals," says sales supervisor Thiago Davidian.

"My team sold more than 50 units yesterday and more are going as we speak."

Emerging mortgage market

Mr Davidian wears the tired but satisfied smile of someone who has been working hard and been generously rewarded for his efforts.

Thiago Davian, estate agent Estate agent Thiago Davian is doing all he can to cash in on Brazil's property boom

"It's great to be working with real estate in Brazil at the moment," he grins.

Cocktail parties, with dozens of real state agents pitching their best offers, have become frequent events in big Brazilian cities in recent months.

It has all come about because of a sharp drop in mortgage rates, which fell to single-digit figures last year.

Before then, the Brazilian mortgage market had been embryonic at best as interest rates in the country have historically been among the highest in the world.

In recent months, a particularly healthy mortgage market has emerged. Mortgage lending rose to a whopping 23.8bn reais ($13.6bn; £8.9bn) during the first half of this year, a 77% rise when compared with the same period a year ago.

The rise in demand has resulted in a doubling in the price per square meter in Sao Paulo, according to Embraesp, a real estate research company.

The construction industry has also gained, growing 15% during the first half of 2010 when compared with the same period a year earlier, and thus outpacing the 9% overall economic growth rate (GDP).

Learning from mistakes elsewhere

Such explosive price growth is causing concerns, with some industry players worrying about a possible property bubble bursting with all the resulting pain on the rest of society, such as the banking crisis seen in the US and Europe or the property surplus seen in Spain.

New houses in Brazil Owning a house and a car is a dream for many Brazilians

"We have carefully studied what happened in this international property bubble," says Joao Crestana, president of Secovi-SP, Brazil's real estate developers' association.

"We must not make the same mistakes as the United States and Spain did."

Developers in Brazil insist banking regulations here are much tighter than they were in the US and say the debt burden here is not as large.

"Here in Brazil, the average loan to value is 60%," Mr Crestana reasons, referring to how much money is borrowed in relation to the total value of the property.

"In the United States it could reach up to 120% or 130%."

'Plenty of buyers'

Some in the industry also say properties in Brazil are bought as homes rather than as investments.

Sergio Oliveira After years of building homes for others, Sergio Oliveira has bought his own

"In Brazil there are eight million families who do not have a house to live in," says Mr Crestana.

"That means 30 million people, equivalent to the whole population of Argentina, do not have a house.

"So on the demand side we have nothing to worry about for the next 15 years at least," he insists, pointing to how economic growth in Brazil has elevated some 30 million people into the country's "lower middle class".

"And now they want their own homes," he says.

Own place

Sergio Oliveira is one of them.

Fourteen years ago he moved to Sao Paulo from the north-east of the country. Since then he has worked as a mason, building residential buildings.

"There's a lot of work nowadays," he says.

"If you are not happy with a job, it's easy to find another one, so the contractors have to pay us better salaries."

Consequently, after spending almost half his life building houses for others, Mr Oliveira has been able to buy one for himself.

"It feels really good to have a place of my own now," he says.

"I used to pay rent and had to live in a very bad neighbourhood. Now I am paying a mortgage, but it is for something that will stay with me and my family."

Growing ambitions

Antonio and Aparecida Duarens have also bought their own home, 22 years after they got married, though their story is different.

Rather than making it big in the civil construction industry the way Mr Oliveira has done, they have tapped into one of many government programmes aimed at giving low income families easier access to mortgages.

"Had it not been for the economic growth and the government programmes, it would have taken me much longer to buy my own house," says Mrs Duarens, whose daughters Juliana, 21, and 19-year-old Tiago still live at home.

"We all have jobs here," says Mrs Duarens, and so with their four salaries the family is able to pay 1,000 reais per month on their 20-year mortgage.

In the past, they used to pay 650 reais rent per month, so costs have certainly risen sharply, but their old place was much smaller and the rent money was lost forever, she reasons.

"Paying rent is horrible," she says. "It seems as if you are giving your money away and getting nothing concrete in return."

Owning their own home gives the family a "strong base to plan for a better future", Mrs Duarens says, explaining how she has been studying to become a hairdresser and beautician to escape her job doing night shifts as a guard in a nearby factory.

"My dream is to open my own beauty parlour," she says. "And my husband wants to buy himself a truck so can quit his job in the rubbish collection company and work for himself", she says.

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http://www.bbc.co.uk/news/business-11165640

Cida Duraens and her husband recently bought their very first home - after 22 years of marriage

There is music, drinks, food and smart people, but this is not an ordinary party; it is the launch of yet another real estate development in Sao Paulo, Brazil's largest city.

Continue reading the main story

Related stories

* Boom allows Brazilians a home

* Brazil's consuming desire for status

Construction of the properties that are up for sale has not yet started, and buyers will not get into their new homes for another two years, yet the competition for the best spots is fierce.

When a customer decides to buy, the estate agent has to rush through all the relevant the documents before a competitor closes the deal.

"Last night I didn't have any sleep because we spent all night closing deals," says sales supervisor Thiago Davidian.

"My team sold more than 50 units yesterday and more are going as we speak."

Emerging mortgage market

Mr Davidian wears the tired but satisfied smile of someone who has been working hard and been generously rewarded for his efforts.

Thiago Davian, estate agent Estate agent Thiago Davian is doing all he can to cash in on Brazil's property boom

"It's great to be working with real estate in Brazil at the moment," he grins.

Cocktail parties, with dozens of real state agents pitching their best offers, have become frequent events in big Brazilian cities in recent months.

It has all come about because of a sharp drop in mortgage rates, which fell to single-digit figures last year.

Before then, the Brazilian mortgage market had been embryonic at best as interest rates in the country have historically been among the highest in the world.

In recent months, a particularly healthy mortgage market has emerged. Mortgage lending rose to a whopping 23.8bn reais ($13.6bn; £8.9bn) during the first half of this year, a 77% rise when compared with the same period a year ago.

The rise in demand has resulted in a doubling in the price per square meter in Sao Paulo, according to Embraesp, a real estate research company.

The construction industry has also gained, growing 15% during the first half of 2010 when compared with the same period a year earlier, and thus outpacing the 9% overall economic growth rate (GDP).

Learning from mistakes elsewhere

Such explosive price growth is causing concerns, with some industry players worrying about a possible property bubble bursting with all the resulting pain on the rest of society, such as the banking crisis seen in the US and Europe or the property surplus seen in Spain.

New houses in Brazil Owning a house and a car is a dream for many Brazilians

"We have carefully studied what happened in this international property bubble," says Joao Crestana, president of Secovi-SP, Brazil's real estate developers' association.

"We must not make the same mistakes as the United States and Spain did."

Developers in Brazil insist banking regulations here are much tighter than they were in the US and say the debt burden here is not as large.

"Here in Brazil, the average loan to value is 60%," Mr Crestana reasons, referring to how much money is borrowed in relation to the total value of the property.

"In the United States it could reach up to 120% or 130%."

'Plenty of buyers'

Some in the industry also say properties in Brazil are bought as homes rather than as investments.

Sergio Oliveira After years of building homes for others, Sergio Oliveira has bought his own

"In Brazil there are eight million families who do not have a house to live in," says Mr Crestana.

"That means 30 million people, equivalent to the whole population of Argentina, do not have a house.

"So on the demand side we have nothing to worry about for the next 15 years at least," he insists, pointing to how economic growth in Brazil has elevated some 30 million people into the country's "lower middle class".

"And now they want their own homes," he says.

Own place

Sergio Oliveira is one of them.

Fourteen years ago he moved to Sao Paulo from the north-east of the country. Since then he has worked as a mason, building residential buildings.

"There's a lot of work nowadays," he says.

"If you are not happy with a job, it's easy to find another one, so the contractors have to pay us better salaries."

Consequently, after spending almost half his life building houses for others, Mr Oliveira has been able to buy one for himself.

"It feels really good to have a place of my own now," he says.

"I used to pay rent and had to live in a very bad neighbourhood. Now I am paying a mortgage, but it is for something that will stay with me and my family."

Growing ambitions

Antonio and Aparecida Duarens have also bought their own home, 22 years after they got married, though their story is different.

Rather than making it big in the civil construction industry the way Mr Oliveira has done, they have tapped into one of many government programmes aimed at giving low income families easier access to mortgages.

"Had it not been for the economic growth and the government programmes, it would have taken me much longer to buy my own house," says Mrs Duarens, whose daughters Juliana, 21, and 19-year-old Tiago still live at home.

"We all have jobs here," says Mrs Duarens, and so with their four salaries the family is able to pay 1,000 reais per month on their 20-year mortgage.

In the past, they used to pay 650 reais rent per month, so costs have certainly risen sharply, but their old place was much smaller and the rent money was lost forever, she reasons.

"Paying rent is horrible," she says. "It seems as if you are giving your money away and getting nothing concrete in return."

Owning their own home gives the family a "strong base to plan for a better future", Mrs Duarens says, explaining how she has been studying to become a hairdresser and beautician to escape her job doing night shifts as a guard in a nearby factory.

"My dream is to open my own beauty parlour," she says. "And my husband wants to buy himself a truck so can quit his job in the rubbish collection company and work for himself", she says.

Just another BBC property ramp trying to support the housing market.

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Financing private property is truly evil.

It prices people out, and gives their wealth to the banks....meanwhile, people feel wealthy.

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Financing private property is truly evil.

It prices people out, and gives their wealth to the banks....meanwhile, people feel wealthy.

Hmm.

Tricky.

I'd like to agreethat it's all bad, but having been to Brazil before the boom started and since I can tell you the situation beforehand was pretty sh1te for everyone except the rich. That's still mostly the case, but access to credit means that many people now own their own place, instead of being forced to rent from the rich.

For the first entrants into the Ponzi, it's good. The problem is, how do you then prevent the situation developing into the bank-enrichment scheme it always seems to become?

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Hmm.

Tricky.

I'd like to agreethat it's all bad, but having been to Brazil before the boom started and since I can tell you the situation beforehand was pretty sh1te for everyone except the rich. That's still mostly the case, but access to credit means that many people now own their own place, instead of being forced to rent from the rich.

For the first entrants into the Ponzi, it's good. The problem is, how do you then prevent the situation developing into the bank-enrichment scheme it always seems to become?

Sounds like subprime all over again. That ended well last time.

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  • 244 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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