It's Not All Forth; Latin America's Housing Boom  

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Jenis: Article from Bulletin/Magazine
Dalam koleksi: The Economist (http://search.proquest.com/) vol. 399 no. 8732 (May 2011), page 67-68.
Topik: Property Values; Real Estate; Price Increases; Lending Institutions; Housing

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The property fever in Latin American countries makes some fear that the region's economic renaissance may have become over-exuberant. But the housing boom is grounded in rising prosperity rather than excessive debt. In select parts of Brazil's big cities, property prices are certainly racing ahead. The property boom is being driven by a hefty increase in the number of potential buyers. Until recently rules that made foreclosure difficult or impossible when a mortgage-holder was in arrears meant that lending against property was unattractive. The total of outstanding loans secured on property is fast approaching 5% of GDP--still tiny, but a trebling in just five years. Brazil is not the only Latin American country displaying signs of property exuberance. A further example is Peru. Estate agents in Lima, its capital city, say that homes in the swishest seaside neighbourhoods have recently doubled in value and that the cost of building plots has trebled. Colombia and Panama look frothy, too. The dreadful example from elsewhere of what can happen next has led some to fear a Latin American housing bust. But--for now, at least--the new, higher values look firm. Many governments in the region are chipping away at the problem by offering subsidised housing loans to the lowest-paid. But the market impact is limited by tight government budgets. Arguably the recent price rises at the top end are simply a correction after many years in which quality housing could be picked up cheaply by the few people in the region able to pay in cash. Now they are facing competition.

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