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Brazil’s Urban Land and Housing Markets

How Well Are They Working?

David E. Dowall

May 2007, English

As does the United States, Brazil faces many housing policy challenges. David E. Dowell points out that Brazilian housing is expensive and lacks local services and secure land tenure—a phenomenon that results from property market inefficiency. Although data from 1970 to 2000 indicate that the permanent housing stock was able to keep pace with the increase in household formation, urban dwelling units received fewer local services (piped water) in Brazil than in countries whose income level is comparable with Brazil’s. The reason is that Brazil’s investment in local infrastructure has not risen fast enough to meet the demand generated by the increase in housing production. Lack of serviced land increases land prices and induces further expansion of informal urban settlements, which Dowell defines as areas that lack access to local services.

In Brazil, informal land and housing markets, estimated to account for about 40 percent of the total increase in housing production between 1991 and 2000, have significant impacts on urban development. First, as cities expand, land consumption per capita has been increasing, thereby exacerbating the already limited supply of serviced land for housing construction. Second, the emergence of informal housing developments away from the city center forces populations to travel greater distances to jobs, increasing commuting costs and reducing social welfare. Third, low-density, dispersed development leads to higher infrastructure cost per capita. In dealing with these problems, Dowell proposes that urban land and housing strategies in Brazil include both curative and preventive elements. The government should continue its efforts to upgrade housing conditions in informal areas and, at the same time, develop more land for housing and local infrastructure construction.

This paper was presented at the Lincoln Institute’s annual Land Policy Conference in 2006 and is Chapter 15 of the book Land Policies and Their Outcomes.