Brazil’s housing boom shows cracks

Just weeks ago, Brazil’s housing market was one of the world’s most dynamic. But now, the global credit crisis has set up housekeeping, and government efforts to stimulate buying are being trumped by consumers’ fears for the future. Through September, Brazil’s housing sector was on fire. January-September sales of new houses and condos were up 25% from the same period in 2007, ignited by a rising economy, decades of pent-up demand, job growth, an increase in affordable mortgage loans and legal changes that improved banks’ powers to repossess property. The sales slowdown, which isn’t reflected yet in official statistics, has hit with sudden force. The nation’s largest home builder, Cyrela Brazil Realty, laid off 300 workers last month and lowered its sales estimate for the year by 25%. Shares of Cyrela and the two dozen other publicly held home builders have plummeted in recent weeks. ‘Whoever thinks Brazil has decoupled from the world economy is talking science fiction,’ Cyrela director Luis Largman said in an interview at the firm’s Sao Paulo headquarters. ‘We are being affected collectively.’