Portugal: a symbol of Europe's growing housing crisis.
Portugal faces challenges in fighting the real estate boom
Bloomberg reports that Portugal is facing challenges in fighting a real estate boom driven by strong demand from foreign investors, while supply can't meet that demand. The cost of housing in Lisbon rose 5.8% in November, reaching a record high of €5426 (about $6000) per square meter, according to data from Idealista. That's the second-biggest gain in Europe after Athens, where real estate is the most sought-after among major European cities tracked by Bloomberg.
Home price growth in PortugalWith house prices rising 30 percent over the past five years, living spaces in Portugal's capital have become more expensive than inMilan, Madrid and Berlin. This makes new housing unaffordable for most locals and shows that the issue of supply often trumps interest rates in determining prices.
Portugal policy changesThe Portuguese government has begun to change course: it has ended the golden visa program and approved a plan to cut tax breaks for new residents. Despite this, however, demand has only increased. "We have seen an increase in inquiries from our foreign clients," said Paulo Silva, head of consultancy Savills in Portugal. "There just aren't enough apartments to meet demand, even with the slowdown in sales. "
Rising real estate prices in other cities
Many other cities are also facing rising real estate prices. Six of the ten cities tracked by the Bloomberg City Tracker show growth. Athens has a 12% year-on-year price increase, while Stockholm is up more than 5%, a six-month streak of increases.
With house prices rising 30 percent over the past five years, living spaces in Portugal's capital have become more expensive than inMilan, Madrid and Berlin. This makes new housing unaffordable for most locals and shows that the issue of supply often trumps interest rates in determining prices.
Portugal policy changesThe Portuguese government has begun to change course: it has ended the golden visa program and approved a plan to cut tax breaks for new residents. Despite this, however, demand has only increased. "We have seen an increase in inquiries from our foreign clients," said Paulo Silva, head of consultancy Savills in Portugal. "There just aren't enough apartments to meet demand, even with the slowdown in sales. "
Rising real estate prices in other cities
Many other cities are also facing rising real estate prices. Six of the ten cities tracked by the Bloomberg City Tracker show growth. Athens has a 12% year-on-year price increase, while Stockholm is up more than 5%, a six-month streak of increases.
The Portuguese government has begun to change course: it has ended the golden visa program and approved a plan to cut tax breaks for new residents. Despite this, however, demand has only increased. "We have seen an increase in inquiries from our foreign clients," said Paulo Silva, head of consultancy Savills in Portugal. "There just aren't enough apartments to meet demand, even with the slowdown in sales. "
Rising real estate prices in other cities
Many other cities are also facing rising real estate prices. Six of the ten cities tracked by the Bloomberg City Tracker show growth. Athens has a 12% year-on-year price increase, while Stockholm is up more than 5%, a six-month streak of increases.
Portugal has become a point of attraction for investorsPortugal has become a point of attraction for investors after undergoing an international bailout in 2014. At the time, the government abolished rent controls and introduced the so-called golden visa - a pathway to residency for a €500,000 investment in real estate - along with tax breaks to attract new residents. That's where the influx of foreign buyers began. One of them is Swiss billionaire Claude Berda, founder of French broadcasting group AB Groupe.
The problem of affordable housing in Portugal
The lack of supply continues to increase, with the amount of affordable housing reaching its lowest level in 15 years by 2022. Only 2% of this is social housing, one of the lowest rates in the European Union. The average price of a new apartment in Lisbon has surpassed those in Dublin and Brussels, according to the Deloitte 2022 Index.
Housing problems in PortugalFor many Portuguese families, whose salaries are among the lowest in Western Europe, the dream of buying their own home has been replaced by expensive and low-quality rentals in remote suburbs. Rising inequality has caused tension and thousands of people have taken to the streets to express their anger over the housing crisis in Lisbon and other Portuguese cities. The socialist government promised to increase the amount of affordable housing and end programs for foreigners. However, exiting the Portuguese market may not be easy. "At the end of the day, the sunny climate, stunning beaches, lifestyle and relatively low cost of living will continue to attract foreign investor interest," said Square Asset Management CEO Pedro Coelho.
Portugal has become a point of attraction for investors after undergoing an international bailout in 2014. At the time, the government abolished rent controls and introduced the so-called golden visa - a pathway to residency for a €500,000 investment in real estate - along with tax breaks to attract new residents. That's where the influx of foreign buyers began. One of them is Swiss billionaire Claude Berda, founder of French broadcasting group AB Groupe.
The problem of affordable housing in Portugal
The lack of supply continues to increase, with the amount of affordable housing reaching its lowest level in 15 years by 2022. Only 2% of this is social housing, one of the lowest rates in the European Union. The average price of a new apartment in Lisbon has surpassed those in Dublin and Brussels, according to the Deloitte 2022 Index.
Housing problems in PortugalFor many Portuguese families, whose salaries are among the lowest in Western Europe, the dream of buying their own home has been replaced by expensive and low-quality rentals in remote suburbs. Rising inequality has caused tension and thousands of people have taken to the streets to express their anger over the housing crisis in Lisbon and other Portuguese cities. The socialist government promised to increase the amount of affordable housing and end programs for foreigners. However, exiting the Portuguese market may not be easy. "At the end of the day, the sunny climate, stunning beaches, lifestyle and relatively low cost of living will continue to attract foreign investor interest," said Square Asset Management CEO Pedro Coelho.
For many Portuguese families, whose salaries are among the lowest in Western Europe, the dream of buying their own home has been replaced by expensive and low-quality rentals in remote suburbs. Rising inequality has caused tension and thousands of people have taken to the streets to express their anger over the housing crisis in Lisbon and other Portuguese cities. The socialist government promised to increase the amount of affordable housing and end programs for foreigners. However, exiting the Portuguese market may not be easy. "At the end of the day, the sunny climate, stunning beaches, lifestyle and relatively low cost of living will continue to attract foreign investor interest," said Square Asset Management CEO Pedro Coelho.
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