The stock of houses for sale in Portugal fell by almost 40% in ten years, by 38.6% to be precise. In the second quarter of this year, there were still more than 58 thousand homes for sale, but at the end of 2014 – the Troika had already said goodbye to the country – there were almost 95 thousand. From that year onwards, real estate agents’ residential portfolios slowly lost weight, with particular emphasis from 2018 to June, according to data from Confidencial Imobiliário based on the Residential Information System. The figures are not exhaustive (there is always supply that escapes the statistics), but their wide coverage allows us to draw the trend, says Ricardo Guimarães, director of the consultancy. And “they underline what the industry is saying. There is a lack of supply,” he emphasizes. They are the result of “increased demand in a context of low levels of new construction”.
There are several factors that explain this demand for housing. The 2021 census showed that there was a significant increase in the number of single-parent families in Portugal. That year, 579,971 households consisting of a mother or father and children were registered, an increase of 20.7% compared to 2011, which is not unrelated to the increase in the number of divorces and separations. The country has also achieved international fame for both living and working. Since 2015, there has been an increasing movement of foreigners living on national territory. Currently there are almost 782 thousand, 393 thousand more than seven years ago. The favorable development of employment and the historically low interest rates also gave families a new purchasing dynamic. All this demand was met with a distinct lack of response from the market.
“Over the past ten years there has been a deterioration in the state of conservation of the building stock, a disinvestment by the state in housing and a slowdown in private investment,” explains Manuel Reis Campos, president of AICCOPN (association that the construction sector). industry). On average, around 15 thousand homes were issued a permit every year, a number compared to the 68 thousand homes in the previous decade. According to the association leader, the current lack of housing supply is no longer a cyclical problem, but “it is rather a structural problem”.
Paulo Caiado, president of APEMIP (association of real estate intermediation companies), recalls the scarcity of construction projects, but points out other wounds: almost total absence of a public offering; greater demand for rental properties; and the absorption of part of the rental supply by approximately 400 thousand immigrants, who have come to work in Portugal in recent years.
Opposite effects
As a solution, the Mais Habitação program raises many questions among agents in the sector. According to Ricardo Guimarães, “all measures are already having effects opposite to what was intended.” And in the field of leasing it is “a disaster”. As he points out, leasing has acted as a social stabilizer in times of crisis, but that is not the role it currently plays. “It’s the first time it hasn’t worked,” he says. The housing crisis, with a drop in sales and an increase in interest rates, has not increased supply in this market nor reduced the value of rental prices. On the contrary. “Real estate development is also unable to build for the middle class. There is VAT on construction, high costs, lengthy licensing… Household income is lower because of interest and inflation. This product ultimately becomes unviable,” he points out. “The supply in the construction sector will decrease, but the supply in the higher segment will remain the same.”
According to Reis Campos, the housing problem “will only be definitively solved with a strong commitment and incentives for the construction and renovation of houses.” The president of AICCOPN defends the need for the state to establish confidence in investors – which has been shaken by the government package and has already led to a slowdown in activity –, create subsidized credit lines for construction, support the training of companies , through incentives for the use of new, more efficient construction processes, such as modular and remote construction, and the use of property taxes as a driver of private investment. On the tax front, it calls for “the application of the reduced VAT rate to all construction, renovation and maintenance of housing, the abolition of AIMI, the IMI returning to the state, the updating of IMT tables based on the valuation of properties, among others”, which he considers “essential for reducing the costs” of houses in Portugal.
Paulo Caiado defends a series of measures to stimulate the rental market. According to him, attractive tax incentives should be created for owners to list real estate at controlled prices, streamlining the processes of adjustment, rehabilitation and construction of the state’s real estate assets with features of rent allocation, encouraging and enabling private development created through support such as land or taxes.
Source: DN
