Housing Prices continue to Rise in Portugal despite the Pandemic

Housing Prices continue to Rise in Portugal despite the Pandemic

The price of housing has continued to rise in Portugal despite the strong blow that the economy has suffered with the coronavirus pandemic, which has not alleviated the problems of accessing a house in the country, according to associations alert, concerned with the social vulnerability of the Portuguese.

The enormous boom suffered by the Portuguese real estate market in recent years has not been reversed with the blow of the coronavirus, and although prices have not risen at such a high rate as in previous years, they have maintained their upward trend.

The price of housing increased by 8.4% in 2020, according to the Price Index published by the National Institute of Statistics (INE), only 1.2 points less than in 2019.

Despite the fact that 171,800 homes were sold in 2020, 5.3% less than the previous year, reflecting the puncture of the economy, the total value of houses sold increased by 2.4%, which shows the increase Of the prices.

An “incredible” rise, in the opinion of Rita Silva, spokesperson for Habita!, a Lisbon association in defense of the right to housing that also warns that the outlook is not better in the rental market.

In areas such as Lisbon, Porto or the Algarve, “the rental price is higher than the wages” in many cases, Silva denounces.

Anyone looking for a flat in the capital can find offers of one-room houses that are around a thousand euros, in a country where the minimum wage is 665 euros.

UNCERTAINTY DUE TO THE PANDEMIC

“The evictions are suspended for the moment,” says Silva, who recalls that this is one of the measures that the Government implemented together with moratoriums for the payment of credits due to the pandemic.

Those moratoriums will “be lifted” this month, and from Habita! they warn that there will be an “explosive situation” of evictions.

From Habita! they put their hopes in the Recovery and Resilience plan – endowed with European funds for COVID – through which the Government plans to put 26,000 public housing houses on the market by 2026, although the association considers that the measure “is not enough “.

“Lack of public housing”, sentence Lurdes Pinheiro from another association in defense of the right to decent housing, Morar em Lisboa (“Living in Lisbon”).

To alleviate the lack of social housing, an affordable rental program was launched two years ago in which owners receive tax exemptions in exchange for lowering the rental price by at least 20% below the market average.

“The program is poorly designed, it does not work,” explains Silva from Habita !, who says that since it was launched in 2019, only around three hundred contracts have been processed.

“The owners do not sign up and the tenants who are looking for a house do not get access to it”, and he emphatically assures: the program is “a nice slogan and little else”.

Both associations are asking for more public housing, which they consider as the only solution to the real estate crisis in Portugal.

FOREIGN INFLATION

If increasing public housing is the solution, they point the finger as one of the causes of housing inflation in Portugal to foreign capital, through two laws: the Golden Visa and the program of tax exemptions for non-habitual residents (NHR ).

Thanks to the NHR, launched in 2009, retirees did not pay taxes on their pensions both in their country of origin and in Portugal if there was an agreement between both States, as was the case in France, Germany or Sweden.

“The market was increasingly disconnected from the purchasing power of those who live and work in Portugal, they are people who have much higher incomes and who are willing to pay more for housing if that means not paying taxes,” says Rita Silva.

Portugal modified the rule at the beginning of 2020, by which all retirees “non-habitual residents” began to contribute 10%, a figure that in many cases is still very far from what they would contribute in their countries of origin.

On the other hand, the Golden Visa program grants residence visas in exchange for the purchase of a home for at least half a million euros, and it is very popular among foreign investors because it allows people to move freely in the Schengen area.

The Government has just approved a reform of this program, which will exclude investments in Lisbon, Porto and the entire Portuguese coastline and will be limited to the interior of the country, a region highly affected by depopulation, and to the archipelagos of Madeira and Azores.

Ben Oakley
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