Land Rent and the New Urban Frontiers: The Brazilian Program My House My Life in Perspective (2009 2015)

Friday, June 24, 2016: 2:30 PM-4:00 PM
228 Dwinelle (Dwinelle Hall)
Fabian Scholze Domingues, UFRGS/PPGE, Porto Alegre, Brazil
This paper uses the differential rent theory of David Ricardo to offer an economic explanation for the recent rise in property prices and rents seen in Brazil between 2009 and 2015. Unlike the advocates of the existence of a speculative bubble in the housing market, it is proposed that increase price in rents and properties come from the expansion of the urban frontier, largely caused by the public policies of housing geared to low-income classes, namely the massive federal program My house My Life. As in the Ricardian model, the analysis is done by dividing the society into three social classes: workers, capitalists and rentiers. It is argued that nominal prices will not decrease, as would be expected if the origin of the phenomenon had been located in the credit market. Thus, the main beneficiaries of this policy is the class of rentiers, not the worker class, neither the capitalist class. The differential rent theory also allows explain movements of gentrification and exclusion, ie revaluation central areas with good urban infrastructure, but degraded, resulting in the exclusion of large population, removed to areas far from the center of metropolitan areas. As a result, to solve the long term problem of housing shortage and ensure the right to housing, the government should create a coordinated set of regulatory measures for the housing policy. These policies should aimed not only housing construction, as well as control of the rent prices, to reduce the excessive burden on housing, and  create of a social tax on vacant dwellings, to curb property speculation.