Launched with a fanfare of publicity, President Luiz Inacio Lula da Silva's bold plan to build one million new houses for low income families was hailed as a stimulus to defend the Brazilian economy against the global downturn.
It includes more than $1 billion in low interest financing for developers, affordable mortgages for lower income buyers and the creation of 1.5 million jobs. And it starts in just 14 days time, da Silva declared.
But some developers and politians are sceptical. They accuse the government of working too closely with the private sector and say that social concerns haven't been fully addressed. They also say that the plan will increase urban sprawl without doing anything about as many as six million vacant properties across Brazil.
Sergio Guerra, a senator and president of Brazil's main opposition party, the PSDB, dismissed the building programme as largely government propaganda. 'A million houses, that is the plan. But neither the state government, nor the mayors, or even private industry believes it. No one believes it. It won't happen,' he declared.
He is also questioning whether people will be able to afford the mortgages. The government said that Brazilians earning up to $2,000 a month will be allowed to apply for financing for the properties built under the plan but 400,000 properties will be reserved for families earning less than $600 a month.
According to the Getulio Vargas Foundation, a think tank, Brazil needs at least 8 million housing units, and critics of the government say that the new plan for a million properties will barely address the situation.
Developers say they cannot see a sudden change in the property market which is suffering lackluster sales because of a slowing, downsizing economy and restrictive credit. They have been finding it tough to get finance from the banks for projects.
According to Soummo Mukherjee of Moody's Investors Service in Brazil the issue of credit for developers is a considerable burden. 'Brazilian developers had very ambitious plans and now they will not be able to deliver on them because of credit conditions which have to do with what's happening outside of Brazil,' Mukherjee said.
Luis Largman, chief financial officer of Cyrela, one of Brazil's biggest developers said there has to be buyers for the plan to succeed. 'It's a great plan, but the world is facing very uncertain times. We will only build if we know there are buyers out there able to pay for it,' he said.
