An IMGW News Report:
Portugal has recently launched a new initiative aimed at helping young people access housing, yet its effectiveness in addressing the underlying issues remains questionable.
The new incentive allows individuals up to 35 years old to secure a 100% mortgage with a state guarantee for their first property purchase. This measure is part of a broader set of government interventions, which also includes exemptions from property transfer taxes and stamp duties, all intended to ease entry into the property market for young adults.
However, critics argue that this measure may fall short of addressing the fundamental problems of low incomes and elevated property prices. Many young Portuguese earn less than €1,000 per month, which complicates their ability to secure loans, even with state support. Furthermore, the supply of affordable housing continues to be inadequate in meeting current demand.
“There is a risk that this measure could intensify existing pressures on housing supply,” remarked economist João Pereira dos Santos. “Although it may assist some young buyers in affording homes priced up to €450,000, it does not tackle the broader issues affecting the younger generation’s ability to access housing.”
These developments follow the government’s decision to eliminate the residency option through property investment within the Investment Migration Programme (often referred to in the media as the Golden Visa). This change, part of the “More Housing” bill, aims to address the housing crisis by redirecting focus towards other investment avenues, such as investment funds, which are anticipated to attract heightened interest from international investors.
Despite these changes, the housing market, especially in Lisbon, has not experienced significant shifts. Property prices in Lisbon have continued to climb, with a 5.8% increase year-on-year as of November, reaching €5,426 per square metre. Demand for property in Portugal remains high, exceeding the available supply. Notably, Lisbon and the Algarve are leading in property value growth, with other regions such as Estoril, Cascais, Comporta, and Sintra also seeing rising property values.
The Investment Migration Programme has had a considerable impact on Portugal’s economy, with a total of 12,497 visas issued since its inception. Although recent legislative changes have moved the focus away from property investment, the programme’s overall economic influence remains substantial.
Portugal continues to appeal to international investors due to its security, quality of life, and healthcare services. Even with recent legislative changes, Lisbon’s property prices remain comparatively lower than in cities such as Paris or Zurich, sustaining its attractiveness for prospective buyers.
In summary, while Portugal’s new housing initiative offers some support for young buyers, its overall impact on the housing crisis remains uncertain without more comprehensive reforms addressing income disparities and supply constraints.
