Arquivos housing program - Murray Advogados

A bet by President Jair Bolsonaro to try and reach voters of the Northeast region, program will be reduced in 2023 to 5% of what was planned

09/05/2022

The government has virtually eliminated any housing policy forecast for 2023 in the budget bill submitted to Congress. The total amount to be allocated to the National Housing Secretariat (SNH) will be R$82.3 million for all actions, being only R$34.1 million to carry out the Green Yellow House, a federal housing program.

A bet by President Jair Bolsonaro (Liberal Party, PL) to try and reach voters of the Northeast region, the program will be reduced in 2023 to 5% of what was planned this year.

In practice, officials with Congress and the SNH linked to the public budget foresee the announcement, in the coming weeks, of the cancellation of plans to resume unfinished works, the halting of works already started and the cancellation of the start of others contracted.

The economic team forwarded a document to the Ministry of Regional Development in June saying that funds available totaled R$788 million, including R$650 million for the Green Yellow House program. The National Housing Secretariat is part of this ministry. In the budget bill, however, the total amount for the secretariat fell to R$82.3 million (10.4%), while the program will receive only R$34.1 million (5.2%).

Contracts are long-term, so they go beyond four-year terms in office – the Bolsonaro administration is paying for contracts signed during the Rousseff administration (2011-2016), for example. With no prospect of funds to continue running the program after the end of the year, the construction works will stop.

With the bill as it is, the hope for maintaining a housing policy in 2023 would fall on a change in the allocation of budgetary funds by Congress. In other words, the construction of houses for the poorest population may be at the mercy of the Centrão – a cluster of center and center-right parties that props up Mr. Bolsonaro – and the benefits of the multi-billion “secret budget,” a system for distribution of public funds used to maintain political support for the government.

In his government plan registered in the Superior Electoral Court (TSE), President Bolsonaro, which is running for reelection, cites the Green Yellow House program once, stating that the program “promotes the right to citizenship, in order to universalize access to housing acquisition in urban areas.” It also says that the program offered “the lowest interest rate ever for financing residential properties, starting at 4.5% per year.” In addition, it briefly mentions the importance of popular housing, stating that this is one of the factors that promote “well-being,” along with basic sanitation, education, leisure, culture, and security.

Asked about the funds foreseen for the Green Yellow House program next year, the Regional Development Ministry said that “fund needs for the 2023 budget have been formally forwarded” to the Economy Ministry. The Economy Ministry, on the other hand, acknowledged that “the funds foreseen fell short of the need and will of the federal administration,” but stressed that the budget bill will still be debated in Congress.

José Carlos Rodrigues Martins — Foto: Ana Paula Paiva/Valor

In an online event on Thursday, the head of the Brazilian Chamber of the Construction Industry (CBIC), José Carlos Martins, said that the budget reduction meant “a disaster.” He cited the possibility that construction works will have to be paralyzed again due to a lack of funds.

Mr. Martins told Valor that some construction works within the program will be paralyzed by lack of funds. In this bracket, the funds are aimed at households with incomes of up to R$1,800, and the value of the property is subsidized by up to 90%. The bracket was eliminated when the program name changed from My Home My Life (created by the Workers’ Party administrations) to Green Yellow House.

Ronaldo Cury, vice-president of housing at the São Paulo Civil Construction Union (Sinduscon-SP), said that the Green Yellow House program “will not change at all” with the budget cut because the program only uses funds from the Workers’ Severance Fund (FGTS).

Even so, Mr. Cury said that construction companies have been asking the government to inject funds from the federal budget into the program because it would help to strengthen the housing policy.

(Ana Luiza Tieghi contributed to this story from São Paulo.)

*By Vandson Lima, Estevão Taiar — Brasília

Source: Valor International

https://valorinternational.globo.com/

Trade groups, analysts and developers included in Green Yellow House have been calling for a new update of the housing program subsidies — Foto: Tomaz Silva/Agência Brasil

The Brazilian Chamber of the Construction Industry (CBIC) unveiled this week the sector’s data for the quarter, which shows stability compared to the beginning of 2021. Sales are up 1.4%, while new launches fell 2.6%. But the results hide the most complicated situation of properties in Green Yellow House. New launches included in the federal housing program dropped 25.6% year over year, to 22,300 new units.

Trade groups, analysts and developers included in Green Yellow House have been calling for a new update of the housing program subsidies. The idea is to increase prices of units without seeing customers lose purchasing power, as their income is already pressured by high inflation in Brazil. Building projects aimed at this public are unattractive or even unviable without such update, they say.

This change will come, the new minister of Regional Development, Daniel Ferreira, told Valor. The value of the subsidies will be increased by 12.5% to 21.4%, depending on the location of the project, household income and other criteria. The cap of the amount borrowed remains at R$47,500. The measure will be put in place in June and last by the end of the year. The ministry wants to include 400,000 contracts in the program this year, compared with 91,000 so far.

Now, it remains to be seen if the update will be enough to speed up the segment, which accounts for 42% of the launchings now, compared with a 57% slice in the beginning of 2020.

So far, the rise in launches and sales of units not included in the program offset the drop of projects in the Green Yellow House, but high interest rates hinder new sales.

Besides developers, companies that provide services to the home construction industry also expect the housing program to recover. Versátil, a company that rents scaffolds and props for buildings in Paraná and Santa Catarina, reports an 85% occupation rate, a level above the historical average of 60%. The company plans to keep up the pace at least until mid-2023, when the projects launched in recent years will be ready. After that, Versátil expects changes in the Green Yellow House to keep demand for construction work heated.

Since 2020, the company has already increased by 50% the amount charged to lease its products, due to higher steel prices. This increase is another obstacle for real estate developers, who have reported thinner profit margins due to higher costs.

Considering the combined first-quarter results of public developers, gross margin fell 3.2% year over year, while net profit dropped 14.3%. In a report released on Wednesday, XP cited real estate as one of the sectors in which companies that delivered lower-than-expected results for the first three months of the year.

The Brazilian Association of the Construction Materials Industry (Abramat) blames the prices of raw materials and freight, in addition to taxes – which also hit producers – for the increases. In the year through April, revenues fell 9.3% year over year in the industry, according to the Abramat index. In 12 months, they declined 2.3%.

The members of the Brazilian Association of Manufacturers of Ceramic Tile (Anfacer) also reported bad results in the quarter. The output dropped 2.6%, while ceramic tiles sales fell 11.4%.

Amid the bad news of falling sales, at least the pace of new price increases is also likely to slow down. Celso Petrucci, vice president of CBIC, said that the phenomenon of rising costs is expected to lose steam throughout the year. The National Index of Construction Cost (INCC) is up 11.54% in 12 months, compared with the country’s official inflation of 12.13%.

In the business buildings segment, two deals closed last week suggest a recovery in occupancy and rental value, at least among high-end units, analysts say. BR Properties sold more than half of its portfolio to Brookfield for R$5.9 billion, which included 12 business towers and two plots of land for industrial warehouses. The following day, GTIS Partners sold its 62% stake in Infinity Tower, a high-end building near Faria Lima Avenue, for R$850 million. The buyer was a group formed by companies Lucio, AMY and Omar Maksoud Engenharia, which already owned the rest of the building.

Source: Valor International

https://valorinternational.globo.com

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