Many Portuguese, including the middle class, are being priced out of Portugal’s property market by rising rents, surging home prices and climbing mortgage rates.
There is a great deal of backlash to the Golden Visa programs which were set up in Europe to boost foreign investment and skim more foreign money into government coffers. While it did result in some building and some influx, the impact has been wildly overstated.
Before I’m beset with angry residents, I’ll note that last year, there were 168,000 real estate transactions in Portugal, but there have been less than 10,200 golden visas granted via real estate purchase over nearly twelve years. That’s less than 850 real estate transactions year, on average, or around 0.5% compared to the 168,000 last year.
There are, I’m sure, edge cases where a large residential building was bought, renovated, and then resold mostly to foreign investors- I’ve seen the ads. But as a driver of housing rents I’m skeptical that such a low volume has been the primary driver of rent inflation. I’m seeing ridiculous rents everywhere, and I think it’s a combination of Airbnb-style landlords snatching up inventory for short term rental income (which no private renter can afford nor private buyer/homeowner compete) as well as the condo-bros leveraging their way into tens of hundreds of units for the passive income fad that has swept most of the western world.
On top of the golden visa there are also a lot of digital nomads, who earn a US salary, while living in Portugal. These types obviously don’t mind paying a rent value that is unaffordable for 95% of the population.
Then there were the tax incentives (quite literally “pay no tax” for EU pensioneers to move to Portugal, to the point that Sweden intervened on their side bacause swedish pensioneers were using it to pay no tax anywhere), the refusal to seriously regulate AirBnB which only ended when the highest court of the land finally got around to pass a ruling on it (saying that it’s unconstitutional to turn random appartments in appartment buildings into AirBnB businesses without unanimous agreement from all tenants, as has been done for over a decade, a rulling which by the way does not automatically revert all the licenses passed by city halls for such “conversions” and thus won’t revert those accomodations back to residential) and the lowest amount of public house building since the Revolution in one of the countries in Europe with the least amount of Public Housing, all the while housing construction in general is 1/3 of what it was 30 years ago.
Basically the realestate market has been manipulate by the politicians in power by increasing the Demand (the AirBnB thing was especially bad, with for example 10% of residential units in Lisbon being taken out of the realestate market and turned into tourist accomodation businesses) and keeping Supply at historically very low levels, all of which has pushed house prices up at around 12% a year all the while average salaries went up a few percent (barelly above inflation).
Even the so-called “support measures” by government now that the problem is way beyond the possibility of keeping on ignoring it (it’s causing more than half of young graduates to leave the country and even making shops close due to too high rents), are almost all on the side of propping up a crazy overvalued market (i.e. “giving people temporary help to pay” and “lowering loan criteria” rather than meaningfully increasing supply and cutting down on investment demand)
Of course realestate “investors” won massivelly from this, and guess what is the main secondary (sometimes primary) income source of elected mainstream portuguese politicians (especially members of parliament from outside Lisbon who get a “relocation subsidy” that covers whatever their rent in Lisbon) is…
The “funny” things for me is that this growing problem was already very visible when I moved from abroad back to Portugal almost 5 years ago: for example it was already cheaper to rent in Berlin than in Lisbon, even though incomes there are 2 to 3x larger. However the “quality” of portuguese politicians in general is such that there is no strategy and they only react to events and jump on the bandwagon, so only now that shit has trully hit the fan are they talking about it whilst pretty much having remained silent to all the (pretty obvious already back then) measures that were very all very visibly pushing prices up in what was already a clearly overvalued market.
That very well could be. I’d forgotten about the D7, though I don’t know how many people are using it. The real digital nomad visa just took effect so it hasn’t caused the problem, but I’ll bet there’s a shit-ton of British (mostly) who don’t even have to blink to get a short term annuity that meets the income requirements for a D7 in Pt. And they’re definitely willing and able to pay a above market.
There is a great deal of backlash to the Golden Visa programs which were set up in Europe to boost foreign investment and skim more foreign money into government coffers. While it did result in some building and some influx, the impact has been wildly overstated.
Before I’m beset with angry residents, I’ll note that last year, there were 168,000 real estate transactions in Portugal, but there have been less than 10,200 golden visas granted via real estate purchase over nearly twelve years. That’s less than 850 real estate transactions year, on average, or around 0.5% compared to the 168,000 last year.
There are, I’m sure, edge cases where a large residential building was bought, renovated, and then resold mostly to foreign investors- I’ve seen the ads. But as a driver of housing rents I’m skeptical that such a low volume has been the primary driver of rent inflation. I’m seeing ridiculous rents everywhere, and I think it’s a combination of Airbnb-style landlords snatching up inventory for short term rental income (which no private renter can afford nor private buyer/homeowner compete) as well as the condo-bros leveraging their way into tens of hundreds of units for the passive income fad that has swept most of the western world.
On top of the golden visa there are also a lot of digital nomads, who earn a US salary, while living in Portugal. These types obviously don’t mind paying a rent value that is unaffordable for 95% of the population.
Then there were the tax incentives (quite literally “pay no tax” for EU pensioneers to move to Portugal, to the point that Sweden intervened on their side bacause swedish pensioneers were using it to pay no tax anywhere), the refusal to seriously regulate AirBnB which only ended when the highest court of the land finally got around to pass a ruling on it (saying that it’s unconstitutional to turn random appartments in appartment buildings into AirBnB businesses without unanimous agreement from all tenants, as has been done for over a decade, a rulling which by the way does not automatically revert all the licenses passed by city halls for such “conversions” and thus won’t revert those accomodations back to residential) and the lowest amount of public house building since the Revolution in one of the countries in Europe with the least amount of Public Housing, all the while housing construction in general is 1/3 of what it was 30 years ago.
Basically the realestate market has been manipulate by the politicians in power by increasing the Demand (the AirBnB thing was especially bad, with for example 10% of residential units in Lisbon being taken out of the realestate market and turned into tourist accomodation businesses) and keeping Supply at historically very low levels, all of which has pushed house prices up at around 12% a year all the while average salaries went up a few percent (barelly above inflation).
Even the so-called “support measures” by government now that the problem is way beyond the possibility of keeping on ignoring it (it’s causing more than half of young graduates to leave the country and even making shops close due to too high rents), are almost all on the side of propping up a crazy overvalued market (i.e. “giving people temporary help to pay” and “lowering loan criteria” rather than meaningfully increasing supply and cutting down on investment demand)
Of course realestate “investors” won massivelly from this, and guess what is the main secondary (sometimes primary) income source of elected mainstream portuguese politicians (especially members of parliament from outside Lisbon who get a “relocation subsidy” that covers whatever their rent in Lisbon) is…
The “funny” things for me is that this growing problem was already very visible when I moved from abroad back to Portugal almost 5 years ago: for example it was already cheaper to rent in Berlin than in Lisbon, even though incomes there are 2 to 3x larger. However the “quality” of portuguese politicians in general is such that there is no strategy and they only react to events and jump on the bandwagon, so only now that shit has trully hit the fan are they talking about it whilst pretty much having remained silent to all the (pretty obvious already back then) measures that were very all very visibly pushing prices up in what was already a clearly overvalued market.
That very well could be. I’d forgotten about the D7, though I don’t know how many people are using it. The real digital nomad visa just took effect so it hasn’t caused the problem, but I’ll bet there’s a shit-ton of British (mostly) who don’t even have to blink to get a short term annuity that meets the income requirements for a D7 in Pt. And they’re definitely willing and able to pay a above market.