Housing Demand in Brazil: Evidence from the Formal and Informal Sectors

This paper describes the determinants of housing demand in Brazil, with the intention of informing policy aimed at reducing the housing deficit and increasing home ownership. As price elasticity for renters is slightly higher, public policies that aim to influence the price of dwellings and/or the income of households are expected to affect renters more than owners. Given that rent is a pro-cyclical variable and that housing-price supply elasticity tends to be low, a social housing policy focused on the rental market might be an effective option, at least in the short run, to satisfy the increasing housing demand observed in Brazil.