The Financialization of Housing and Spatial Segregation: New Frontiers in Brazilian Cities

Urban space plays a crucial role in the contemporary processes of capital accumulation, which is essential to analyse transformations on social housing policies and their impacts on patterns of socio-spatial segregation in the cities. More than mere effects of the financialization of the world economy, changes in the production and consumption of urban space have figured as driving forces of a new economic order, characterized by deep connections between financial markets and real estate.

Cities in general and the  housing sector in particular have not only become fertile fields for commoditization of social needs and expansion of market relations, but also been progressively mobilized as guarantees for financial assets.

Social housing was not the sub-sector to be affected firstly by such phenomena, which has gone further where the expected rates of return are higher such as corporate buildings or luxury residences. However, it stands as a terrain of strategic relevance for business due to its large scale.

In this context, rather than ways of providing social rights, housing policies have been progressively conceived as means of  opening new frontiers of financialization in   low income residential markets. Like in many other countries, this is the case of "Minha Casa Minha Vida" program, the main housing policy implemented in Brazil, which subsidize homeownership to lower income households.

With the protagonist role of private developers in the formulation of social housing projects, their spatial dimension are conditioned by cost calculations made by economic agents seeking to maximize profits. Without taking into account urban policy goals, the definition of the projects' location is mainly guided by the criteria of the cheapest land available - generally also the most precarious places. As a consequence, social housing projects are reinforcing historical trends of segregation and ghettification of the poor in Brazilian cities.