Government reserves BRL 13.7 billion for Minha Casa, Minha Vida in 2024, up 41% – 09/06/2023 – Market

The government of Luiz Inácio Lula da Silva (PT) reserved BRL 13.7 billion in the 2024 Budget proposal for the Minha Casa, Minha Vida housing program, one of the social showcases of the PT administration.

The amount represents an increase of 41.1% compared to the current allocation of BRL 9.7 billion for 2023.

The expansion of the program budget was received by the construction sector as a signal from the government with the maintenance of the works already in progress and of the new units to be contracted later this year.

This is a different reality from that observed from 2017 to 2022, when resources for housing policy dwindled, forcing construction companies to paralyze developments. The budget restriction generated constant complaints from the sector for the lack of predictability.

Of the total resources planned for next year, R$ 10.8 billion will go to the FAR (Fundo de Arrendamento Residencial), which funds the resources of tier 1.

The segment is focused on serving families with incomes of up to R$2,640 in urban areas and has the highest proportion of subsidies from the federal government.

The amount reserved for the FAR in 2024 is 39.5% higher than the forecast for 2023 (R$ 7.8 billion).

The other resources will fund subsidies for track 1 in the modalities focused on rural areas, small towns (up to 80 thousand inhabitants) or non-profit private entities.

Sought, the Ministry of Cities stated that the specific hiring targets for 2024 are still in the “final definition phase”.

In the presidential message that accompanies the Budget proposal, however, the government talks about contracting 50,000 new housing units for tier 1 next year.

The government already had an estimate of slowing down the pace of new hires next year, as shown by the Sheet.

So far, the Ministry of Cities has already authorized the return of works on 17,113 housing units and the delivery of another 10,122 already completed. The folder intends to resume the construction of a new batch of houses, but this still depends on space in the Budget.

In September, the government should also publish the result of the selection process for hiring 130,000 new housing units in urban areas. The goal for the year, according to the Ministry of Cities, is to reach 146,000 hires in this modality.

In October, another 28,000 residences will be signed by MCMV Entidades, which grants subsidized financing to families that organize themselves through private non-profit entities to build their homes.

In November, the government plans to hire 30,000 housing units in the rural modality, which follows different criteria. In this category, range 1 includes those with annual gross family income of up to R$ 31,680.

The forecast is that the construction of the new houses authorized this year will extend until mid-2025 – the period of works takes 18 to 24 months, on average. Therefore, the budget reserved for next year should be concentrated on the continuity of these undertakings. The average cost of the residences should be around R$ 160 thousand.

The president of the CBIC (Brazilian Chamber of the Construction Industry), Renato Correia, affirms that the volume of resources reserved in the Budget is “good news” by signaling “the speed of march that is possible at this moment”.

On the other hand, he considers that the size of the program is still insufficient to face the housing deficit in the country.

Brazil has a deficiency of 5.9 million homes, according to the diagnosis by the João Pinheiro Foundation for the year 2019, the most recent one available.

In this universe, there are about 1.5 million precarious homes, which include those improvised in tents or viaducts and those classified as rustic housing (without plaster or wattle and daub).

“People are always concerned that [o volume de recursos] should not be enough to face the housing deficit that exists in the country. It needs more resources”, says Correia.

According to him, the government would need to allocate between R$ 18 billion and R$ 20 billion a year to get closer to the targets. “What we expect is that the government will find ways to supplement this to keep the pace of hiring around 130,000 [ao ano]”, it says.

Minha Casa, Minha Vida is one of the main social programs of the federal government. The goal is to hire 2 million housing units by the end of President Lula’s term, considering subsidized housing for tier 1 and financed housing for other income groups.

Within this goal, the forecast is to allocate 1 million homes to families with a family income of up to R$ 2,640, of which 500 thousand through construction subsidized with federal resources.

The program is divided into three tracks. Today the upper limit is R$8,000, but Lula has already asked for studies to raise the ceiling to up to R$12,000. If this is done, the maximum value of the property financed by the program can reach R$ 500 thousand. Today it is R$ 350 thousand.

In addition to its social importance, the program is also important for the civil construction sector, hence the sector’s concern with the government’s estimates for the coming years.

The housing market is divided into two segments, low-income and high-income. Minha Casa, Minha Vida is vital to warm up the low-income, especially in the current scenario in which the high-income suffer from high interest rates.