Faced with the unprecedented housing crisis is located Lisbon, which records – according to Bloomberg – the second largest increase in housing prices in major European capitals after Athens.
Government of Portugal, after successfully attracting wealthy foreigners with a series of investment incentives, it is now trying to drag down the markets which push housing prices to unimaginable levels.
According to “Daily”in November housing costs have risen by 5.8% and 30% over the past five years, so houses are now more expensive than Milan, Madrid and Berlin. This is the second largest increase in Europe after Athenathe “hottest” real estate market in the EU.
Portugal ends tax incentives
The Portuguese government recently began to reverse course and ended the program “golden visa” and approval of the removal plan tax incentives for new residents. “Despite the changes, demand from foreign customers remains high. There just aren’t enough homes to fill it, even if sales have slowedsays Paulo Silva, head of real estate firm Savills.
While the end of the era of “cheap money” has hit purchasing power across Europe, a lack of supply is affecting prices in many cities more than meets the eye. It follows in six out of ten markets Bloomberg City Trackerprices are rising. Athens sees an annual increase of almost 12%, Stockholm more than 5%, with six consecutive months of growth, while prices in Madrid and Milan arestill growing steadily at a rate of over 3%. Only Paris was the worst performer, down more than 6%.
Lisbon became a hot spot for investment after the end of international aid in 2014. At the time, the government abolished rent controls and introduced a “golden visa” that offered residency to non-Europeans, in exchange for a real estate investment of €500,000 along with tax credits.
Since then, thousands of foreign buyers have flocked to Lisbon in search of bargains as the country recovers from the economic crisis.
Between them Swiss billionaire Claude Berda, founder of French broadcaster AB Groupe. In 2016, he teamed up with local investor José Cardoso Botelio to found Vanguard Properties and built nearly a dozen residential buildings in the city of half a million. In the last two months, they delivered 500 apartments, almost half to foreign buyers, and they have nothing to sell next year.
The dream of buying a home was replaced by expensive rents
In 2022, the number of available houses in Portugal reached its lowest level in the last 15 yearsAccording to Confidencial Imobiliario, which collects data on the real estate market, the average price of a new home in Lisbon has overtaken Dublin and Brussels, according to Deloitte’s Real Estate Index 2022.
For many Portuguese families, wages whose are among the lowest in Western Europe, the dream of buying a home has been replaced by expensive rents in distant suburbs. At the same time, social housing represents only 2% of the total population, which is one of the lowest in the EU. Rising inequality fueled tensions and thousands of Portuguese took to the streets earlier this year to protest the housing crisis, echoing sentiment in other European cities.
Portugal’s socialist government has pledged to increase the number of affordable homes and end incentives for foreigners. Outgoing Prime Minister Antonio Costa he says these programs fueled real estate speculation. But Portugal may have a problem “falling off the map” of attractive destinations. “Ultimately, the country’s warm climate, stunning beaches, lifestyle and relatively low cost of living will continue to attract foreign investors.“, summarizes Pedro Coelho, CEO of real estate investment company Square Asset Management.
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