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Housing stock in Brazil: estimation based on a hedonic price model

  • Economics


Housing stock in Brazil: estimation based on a hedonic price model - BIS Papers No 21, part 21, April 2005 Housing stock in Brazil: estimation based on a hedonic price model Luís Otávio Reiff1 and Ana Luiza Barbosa2 1. Introduction As an important aspect for the level of wealth, social welfare and economic growth, the housing stock, and more specifically, home ownership are significant structural mechanisms in the reduction of poverty and social inequalities.3 Nevertheless, the difficulties in measuring the prices of real capital such as housing are very well known. These difficulties stem, in part, from the heterogeneity of these non-standard assets and the infrequency of observed transactions with individual properties. Therefore, accurate measurement of real estate prices is important for both practical and theoretical purposes. In particular, we believe that our empirical findings regarding this subject will make a valuable contribution to the housing policy debate in Brazil, where the housing sector must perform efficiently to provide affordable homes, especially to lower income people. Statistics on the Brazilian economy show that in 1999 rent expenditures reached 14% of GDP and 17% of household consumption (National Accounts, IBGE (2000)). Ipea’s estimates indicate that in this same year housing investment corresponded to 28% of total investment and 5% of gross domestic product (Morandi (2002)). According to the National Household Survey (Pesquisa Nacional de Amostragem de Domicílios - PNAD) conducted by the Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatística - IBGE), 74% of households inhabited their own property in 1999. These figures show how meaningful housing investment is in the capital accumulation process of the Brazilian economy. Moreover, it suggests that housing is the main component of wealth for most Brazilian households. This study is part of a broader project called “Estimates of the Stock

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