Association calls for “urgent public intervention”
Portugal is currently suffering one of the worst housing crises in Europe, with the areas of the Algarve, Lisbon and Porto being those where property prices have more than doubled in the last decade.
A new study, coordinated by economist Guilherme Rodrigues, and published by the Causa Pública association, drills down into what this all means, and, more importantly, what those behind it believe needs to be done.
According to the study, the ‘Portuguese situation registers the greatest deterioration among the 38 countries of the OECD (Organisation for Economic Cooperation and Development)’. It shows that, contrary to the tendency verified in the majority of European countries, housing prices in Portugal continued to increase through 2022 and 2023, in spite of the increases in interest rates – while salaries and people’s incomes have failed spectacularly to keep up.
Just in numbers, property prices have increased by an average of 6.1 percentage points per year, while salaries and incomes have grown by just 0.9 percentage points.
In the Algarve, the demand for housing has been ‘aggravated’ by the increase in tourism and foreign investment, putting additional pressure on local residents.
Many families, for example, face spending more than 40% of their income to keep a roof over their heads.
This dynamic has contributed to the inequality between regions and generations, says the study, making it difficult to attract workers for public services and local businesses (as they simply cannot find an affordable place in which to live).
Add to this the fact that Portugal has one of the smallest ‘public and social’ housing pools in the OECD, with zero growth over the last decade, and one can understand how vulnerable local residents have become to “fluctuations of the real estate market” (fluctuations being a curious term, as the market essentially has just seen prices increase).
Taken logically, the situation will end up “prejudicing the national economy”, says the study – not simply because of the direct costs associated with purchasing and/ or renting homes, but because of the indirect effects “like the difficulty in attracting qualified labour.
In the Algarve, these factors have significant impacts in the capacity for economic development, especially in critical sectors like services and tourism”.
In the eyes of Causa Pública – which defines itself as “an association of citizens committed to building new paths for Portugal, through public and participatory debate on the country’s development model and governance options” – there needs to be “an urgent public intervention to regulate the market, and reduce social tensions created by the current habitational crisis.
How would this ‘urgent public intervention’ look? This is perhaps the most ‘radical part’: The study refers to “countries like Canada and New Zealand” which have implemented policies to limit the purchase of homes/ apartments by non-residents. This has been suggested here, by left wingers, in the past – but never implemented, even in the times of a left wing government.
With a centre-right government currently at the helm, it may be one of the reasons this study has received such little exposure.
A follow-up analysis may change this, however. It promises to look at the housing situation in the Metropolitan Area of Lisbon “in greater detail”, to outline how the housing crisis “is turning into a real productivity crisis that jeopardises the model for national development”.
