The latest report from the European Commission on housing in the European Union paints a discouraging picture of housing in Portugal, writes Expresso. “Among the various indicators, the country stands out for its overvaluation of house prices by around 35%.”
According to the report, nominal house price growth in Portugal exceeded 200% between 2014 and 2024. However, when inflation is taken into account, house prices rose by more than 50% over the same period, while in the EU they grew by an average of 25%, says the paper.
“In addition to this exacerbated increase, our country leads the way in the overvaluation of house prices, with a 35% increase in values.
“This is the only country where overvaluation is estimated to have increased significantly in 2024,” the document states. In the other countries, there is an overvaluation of between 10% and 20%.
Alongside this growth, Portugal has seen a deterioration in access to housing. In a decade, the ratio between house prices and household income has increased by 20% and borrowing capacity has decreased. At least 85% of loans had an effort rate of 50% (meaning half people’s incomes is going on securing a roof over their heads).
“There is evidence that Portugal is the EU country where tourism has had the greatest impact on house prices,” says the commission, adding in language that takes a moment to process: the expansion of home-sharing platforms ‘contributes to an increase in rents and house prices in some prime locations’.
The term home-sharing platforms refers to AL (alojamento local), the practice PS Socialists tried to curtail, but which the current government has left to continue to flourish.
Brussels now wants rules to limit AL and “protect tenants”.
For more details on how the EU means to achieve this see our story to come.
Source: Expresso
