Minha Casa, Minha Vida boosts real estate market in 2023 – 01/11/2024 – Market

The Minha Casa, Minha Vida program boosted the real estate market in 2023, according to data from a developer entity. On another front, the index that measures the appreciation of shares in the sector leads the rise on the São Paulo Stock Exchange.

Residential property sales in the first ten months of last year grew 23.5% compared to the same period of the previous year, largely driven by the federal program.

Of the 126,774 projects sold, 70.3% are part of the new Minha Casa, Minha Vida. The data is part of the latest survey of the Abrainc-Fipe indicator, obtained by Sheet.

From January to October, the volume of units sold within the social program, which was relaunched by the Luiz Inácio Lula da Silva (PT) government, rose 27.3%. In total, there were 89,126 properties. The volume of launches grew 10.7%.

The increase in projects launched within Minha Casa, Minha Vida in the period analyzed mitigated the total drop in property launches in Brazil, which was 7.7%. The survey was carried out with 20 companies associated with Abrainc (Brazilian Association of Real Estate Developers) in partnership with Fipe (Fundação Instituto de Pesquisas Econômicas).

According to the president of the association, Luiz França, the good performance of Minha Casa, Minha Vida is a reflection of the adjustment measures implemented to expand access to housing for lower-income families.

“There was a big boost in the low-income market due to all the work the government has been doing with the social program,” he says.

Created in 2009 and replaced during the Jair Bolsonaro (PL) administration by the Casa Verde e Amarela program, Minha Casa, Minha Vida returned in mid-2023 with a higher ceiling to finance properties, more subsidies and lower interest rates.

The program increased the number of beneficiaries and stimulated the real estate market, which managed to remain resilient even with the high rate of housing financing, driven by basic interest rates, the Selic, still at a high level.

On the Stock Exchange, the Real Estate Index was the one that advanced the most among the B3 indices in 2023. The increase was around 53%, according to Einar Rivero, director of Elos Ayta Consultoria. Meanwhile, Ibovespa, the stock exchange’s main index, rose 20%.

In a recent analysis of the sector, Itaú BBA highlighted the strengthening that the federal program brought to sales in the low-income segment and the good budget execution of the FGTS (Service Time Guarantee Fund), the main source of resources for credit real estate aimed at the population with lower purchasing power.

Furthermore, the bank also cited the INCC (National Construction Cost Index), which remained at a controlled low level, and the acceleration of the medium-standard segment as positive points for the sector.

According to the Abrainc survey, in addition to Minha Casa, Minha Vida, the medium and high-end segment, which is more resilient to high interest rates, also helped boost the real estate market in 2023.

In the first ten months, the increase in the volume of units sold was 12.5% ​​in this segment, totaling 34,103 properties, and the value of sales grew 8.7%. France attributes the positive performance to the perception that, in Brazil, property is cheap compared to prices in other countries.

“People are realizing that, in the medium term, there will be a price correction, with an appreciation so that the market is in line with international standards”, he states.

The volume and total value of medium and high-end launches, however, fell in the first ten months of last year, 39.7% and 10.1%, respectively. Even so, Abrainc sees clear signs of a gradual adjustment in inventory levels in this segment.

Currently, the duration of the offer, that is, the amount of time that the projects remain idle without selling, is 17 months, compared to the 24 months recorded at the beginning of 2023.

For Leonardo Mesquita, commercial vice-president of Cury —one of the Stock Exchange’s developers that is centered on Minha Casa, Minha Vida—, rarely has the real estate sector started the year with such an encouraging set of conditions as in 2024.

“The FGTS budget has already been established, the ceiling and conditions of Minha Casa, Minha Vida have already been defined, we have positive municipal legislation for housing for the sector and the Selic rate is in the process of falling”, he says.

Today, 65% of the projects sold by Cury are focused on the social program. Mesquita says that the expectation is to increase this percentage in 2024.

For França, from Abrainc, the continuation of the process of falling the Selic rate this year is essential for the development sector to play a “prominent role in economic growth and job creation”.

He says that the real estate market also depends on the maintenance of stable rules for the FGTS. The fund currently yields 3% per year plus the TR (Reference Rate). But an action being judged by the STF (Supreme Federal Court) discusses the change in profitability.

A possible change, however, could affect the financing of Minha Casa, Minha Vida, as it will place a greater burden on the public coffers to cover the increased profitability of the FGTS. The real estate sector says that this change will end up raising housing interest rates and harming the poorest.

PROGRAM ENCOURAGES COMPETITIVENESS AND INNOVATION

Before Minha Casa, Minha Vida was reformulated last year, property sales by small developer REV³, which only operates in the state of São Paulo, were divided into 40% for the middle class and 60% for the housing program.

Now, 90% of the units sold by the company are targeted at Minha Casa, Minha Vida.

For the company’s CEO, Romeu Braga Neto, the social program has spread across the entire real estate sector, benefiting not only larger developers. “This benefits consumers and brings health to the real estate market as a whole, which is increasingly innovating, including cleaner and more environmentally friendly projects and concepts,” he says.

For Jardel Couto, CEO of VCA, a small developer operating in the Northeast, the federal program has encouraged new urban centers in cities, with commerce developing in the surrounding area.

The businessman also cites the benefits of the social program in offering well-being to the population with lower purchasing power. All the projects developed by the company for Minha Casa, Minha Vida, for example, have a gym, semi-Olympic swimming pool, gardens and some even have smart homes.

“We are more focused on entry-level products, that is, on the public looking for their first property. But they are worthy homes. And they are projects that have high potential for appreciation, which also helps these people start thinking about properties as an investment”, says Couto.