The Francisco Manuel dos Santos Foundation's vocation to promote relevant studies on Portuguese society has existed since its inception. But today the Foundation takes an important step by raising its voice and launching for the first time a policy paper which, as the nature of these documents dictates, contains recommendations, in a clear contribution by the Foundation to the resolution of a serious problem in Portugal - that of access to housing.
The authors' analysis of housing affordability proved what we already suspected: housing prices in Portugal are higher than can be explained by macroeconomic factors, and house price overvaluation occurs in particular in Lisbon and Porto.
This makes it clear that this problem is contributing to the accentuation of inequalities in Portugal. And the abandonment of the country by qualified young people at the beginning of their lives also has this problem as a cause.
Compared to 2017, the study shows that households today need to spend a higher percentage of their income to buy or rent a home. And that there has been a decrease in credit applications from younger households and an increase from older households.
The housing market analysis is segmented into a demand and supply analysis. In terms of demand, it was observed that family restructuring (e.g. divorces) contributed to an increase in the number of households and a decrease in their size. Foreigners (mainly Europeans) have increased their investment in national properties, but the weight of gold visas is very small. The use of the housing stock for tourism activity, namely Alojamento Local, has had a significant impact on housing prices, both in rentals and acquisitions, especially in the areas with the highest tourist influx.
In terms of supply, the focus on urban regeneration and the still prevailing effects on the construction sector of the 2008-9 international financial crisis and the sovereign debt crisis in 2010-12 contributed to the reduction in new housing construction. Supply is inelastic, with a number of fiscal and regulatory factors contributing.
"the focus on urban regeneration and the still prevailing effects on the construction sector of the 2008-9 international financial crisis and the sovereign debt crisis in 2010-12 contributed to the reduction in new housing construction."
According to the authors of the study, "there are no immediate solutions to the problem of access to housing, which is expected to continue to worsen in the coming years." Despite the scale of the challenge, in a clear call to action, the study proposes short-, medium- and long-term policies and an integrated approach to the problem "at the macro level, through coherent government and municipal policies, and at the micro level, through individual projects".
Thus, in the short term they propose a focus on demand, through policies that support households in weaker situations. In the medium term, they emphasise that the focus should be on a set of policies that promote the expansion of supply and its elasticity, the provision of integrated and sustainable transport systems, and lower price and rent volatility. They also leave a word on demand restrictions, which they justify: implementing absolute measures to limit Alojamento Local and foreigners are neither effective nor desirable.
We recommend reading the full study to all those in a position to contribute to the solutions.
Update (07092023): Based on the study, and reinforcing the recommendations, the FFMS President's opinion piece in Diário de Notícias.
