The price of houses in the country has increased fourfold in the last three years due to the growth in household income. This gap between the cost of housing and the purchasing power of the Portuguese is illustrative of the difficulties faced by the general population in acquiring a home. The rental market is also not offering itself as a solution at the moment, it is small and rents are high. These indicators prove what the Portuguese have been feeling for a long time. Whether buying or renting, houses are too expensive for the nationals’ pockets.
“The problem is the loss of purchasing power of the population, with house prices rising by an average of 38%. [entre 2019 e 2022]at the national level, while the increase in household disposable income over the same period was only 9%, on average for district capitals”, concludes the study “Accessibility to housing in Portugal”, by Century 21 Portugal.
The difficulties of acquiring a house become apparent when analyzing the offer on the market. The middle class (IRS levels 2, 3, 4), which corresponds to 60% of Portuguese households, should buy a house for a maximum of 190,000 euros, based on an effort rate of 1/3 of disposable income (value recommended by the Bank of Portugal). However, the supply at this price level represents only 42% of the total, the study warns.
Conversely, the supply of homes above 330 thousand euros reaches 32%, while only 11% of households with this purchasing power fall into an income class. And this discrepancy between the availability of housing and the income of Portuguese households is even more pronounced in the country’s two metropolitan areas and is particularly acute in the cities of Lisbon and Porto.
As Ricardo Sousa, CEO of Century 21, says: “In the Lisbon metropolitan region, 43% of homes for sale have an average price level above €330,000, while only 14% of households will be able to afford that purchase level. to fulfil”. In this urban area, 55% of the families belong to the middle class, but only 33% of the supply is sufficient for the purchasing power of these Portuguese.
In the Porto metropolitan area, the scenario is identical. According to Ricardo Sousa in a statement, “The middle class is made up of 61% of households, who own only 41% of the real estate supply at this income level, again, with a large share of homes for sale (28%) aimed at front the public with greater financial resources, but which represents the smallest share of households (11%)”.
When analyzing the country’s two largest cities, the problem between the purchasing profile of customers and the accommodation in the market is more acute. In Lisbon, only 5% of houses for sale match the 49% of the middle class living in the municipality. In Porto, where 53% of households belong to the middle class, only 11% of the supply is sufficient for the income level of these households.
As the study concludes, “the deterioration of the Portuguese people’s access to housing is a reflection of the inadequacy of the existing real estate supply, adapted to the income level of national families”.
The effort increases
In this context, the effort rate of the Portuguese to meet their mortgage obligations is also higher and rising along with the rise in Euribor rates.
According to Century 21’s analysis of the housing market, a loan for the purchase of a house of 90 square meters (the size used in the study) requires an effort rate of 67% in Lisbon and 50% in Porto. In AMLisboa it reaches 47%, in AMPorto 40% and in Faro 39%. These are values well above those recommended by both the national supervisor and Eurostat.
On a more national level, the study shows that if there were 15 district capitals in 2019 where buying a house consumed 20% or less of the budget, only six are currently at that level.
So where can the Portuguese buy a property while respecting the recommended effort ratio? In Aveiro, Évora, Coimbra and Setúbal there is a budget adjustment to the standard home. In the other district capitals, the allocation of 33% of income gives access to housing with an area of more than 100 square meters. Proibitivo is in the process of acquisitions in Lisbon, Porto and Faro, and respective metropolitan areas.
And a similar scenario was identified in the lease. The study concludes that the rental effort exceeds 53% in Lisbon, Porto and these two metropolitan areas.
new policy
To ease housing access problems, Ricardo Sousa is championing more social housing for needy families, taking the pressure off the lower real estate price segment and bringing it into line with the purchasing power of the middle class. At the same time, it advocates creating incentives to encourage the private sector to bring more supply to market, thereby minimizing the imbalance.
“Until the flow of housing available for sale or rent is increased and adapted to the income levels of Portuguese families, it will not be possible to find a sustainable solution in terms of affordable housing,” the study reads.
This requires streamlining permit processes and revising municipal master plans. Ricardo Sousa also points to the need to mobilize and collaborate with owners of vacant or underoccupied land and buildings, to promote new housing solutions and to convert unused, non-residential spaces in city centers into affordable housing solutions.
Sónia Santos Pereira is a journalist for Dinheiro Vivo
Source: DN
