Housing in Lisbon: the city’s main problem? High incomes and fewer and fewer people living in the center and moving to the periphery. Difficulties (if not even impossibility) for young people to buy a house…
The Real Estate Market in Portugal study, launched this week, analyzes the market at a national, but also local level, and looks for the causes of the accelerated rise in housing prices that has taken place in Portugal since 2014 – between 2015 and 2018 prices increased by around 25%, while in the euro zone they increased by 15%. %.
The study by the Francisco Manuel dos Santos Foundation, coordinated and authored by Paulo MM Rodrigues, a researcher at the Bank of Portugal, has the participation of economists Susana Peralta and Luís Aguiar-Conraria.
Although the problem with prices is not limited to the reality of Lisbon and Porto, some of the chapters of the chapter are more dedicated to the capital, and one of them is exactly about the issue of local accommodation – and about the suspension of new 2018 LA registrations in areas that did not meet the minimum housing requirements: Bairro Alto, Madragoa, Castelo, Moura de Santana Graça and, later, Avenida Almirante Reis.
The study closed in the quarter 2019, 20% drop in the number of containment sales prices – this third quarter, 20% fall in the number of containment sales prices – this seller was even more detailed than the sale prices, in the apartments with two rooms, where prices have dropped by almost 20%.
But tourism and local accommodation are not enough to explain the phenomenon of high housing prices in the city, which has already been recognized by Mensagem. Also at stake is foreign investment increasingly weighing on this offer. Legislative instability, the problem of privileges and vacant properties are also responsible for this accelerated price initiative.
As it was carried out before the covid-1 pandemic, there are variables that the study cannot predict, but it is a “starting point for contempla99”, says Paulo MM Rodrigues. In this investigation, an interview will be made with the study, regarding objects, the deepening market of the coming times.
Sales to local accommodation in Lisbon led to one of the property price sales. But these results are not enough to explain the rise in house prices. What are the reasons for this continued rise in prices?
With this study, a more aggregated analysis is carried out at the level of the various districts and the factors we found for the rise in prices were the traditional ones: disposable income, oath rates, employment. These are all important variables.
In our analysis, what we notice is that there is a lag in the evolution of house prices in light of these fundamentals. Of course, eventually there will be others that are being adjusted to prices. Some forces were implemented because the information is not short enough to fit into the models, such as local accommodation, residential investment and tourism. That is, there are other determining variables in addition to those we found, such as residential investment, which is not included in the study. Local accommodation exerted pressure, of course, but there are other factors that do.
The study points to a Portuguese culture that is still very rooted in the idea of “home for life”, even if the demands of the world of work and mobility have changed. Does this also explain the rise in prices?
Yes, and it’s something that feels nationally. The point here is that the rental market is in deficit, there is no legitimacy for an adequate alternative to purchase. In Portugal, and in Lisbon, although it is nice to have your own home, the house works as an anchor. If we think about the important day-to-day life that we have today, one of the aspects is mobility and having your own home is a plus. If you have an offer in Porto or Braga or Faro, it is difficult to make the decision to sell the house because we are anchored.
Will covid have a mental behavior?
I know an expert who works in the real estate market, and he verifies this. Young people no longer demand a home, but community spaces. A place with its own private space, but close to other people.
And in relation to the issue of mobility, jobs that do not physically require the person to be present at work. If telecommuting is here to stay, housing will eventually have to change. There must be a division between work and home space.
There would be a shift in demand to other features of the room that were not so sought after before. But, in fact, politics, for a long time, it was that culture of the house for life, it was ours. We saw it as an investment with forced savings.
In addition to the question of culture – which is changing – why is it that in Portugal you continue to rent less than you buy?
According to experts, there is more an issue of social housing, or there is a need for goods to rent an affordable income, but also an aspect that is lacking. The existing tenancy law does not provide sufficient security for the person who is going to lease the property. You have to protect both the tenant and the landlord. We have statistics in the study about that.
In Portugal, there is a significant number of families who have a second home and comparing the number of people who represent a second home for rent with the number in the euro area, the values are very different. In Portugal, in 2012, only 14% rented their house, while in the euro area the percentage was 30.7%. In 2017, a percentage dropped to 13.4% in Portugal while the eurozone rose. People who have housing do not want to rent it out. Of course, these are the official numbers, there is also the parallel market, where a lease can be made, but it’s just a conjecture.
Is a more efficient rental market part of the solution to the problem of high prices?
Yes, I think so. Increasingly, especially for young people, home ownership is not easy. And there is another aspect that could be important and a decisive factor in this regard: no study has a dynamic analysis of house prices and the dynamics of bank expectations and they do not differ much.
Before 2018, access to credit was easier, today banks do not have all the capital, but only a percentage. A young woman already has to have a still significant percentage of the capital to make a down payment, for more in Lisbon. 10 or 20% is already a lot of money.
Furthermore, in the spoken study of a characteristic of families: in English it is said rich hand of mouth, are families that have an above-average wealth, but this wealth comes from homeowners. With a shock to the economy and interest rates, these families could feel a big hit. They have above-average equity, but lack liquidity. And the truth is, I can’t sell my house from today to tomorrow.
What needs to be done by the State to improve the rental market and the real estate market?
Look at social housing and housing stock. Look to regularize. See what exists and if it is suitable. Create correction that is for tenants and landlords.
What can you expect in the coming years?
A curious thing happened with covid. During the pandemic, there was an 8% contraction in GDP. With this contraction we would expect prices to fall. But that didn’t happen, they continued to rise, and that shows another aspect that has to do with foreign investment. We think that the housing market is the local market, but what the study shows is that there is a strong synchronization between Portugal and European countries. That is, we are starting from a more global paradigm and external constraints can have an impact on Portugal. For those of us who study the models, it makes the challenge even greater. We have to consider another influence on these prices.
Ana da Cunha
He was born in Porto, 24 years ago, but since 2019 he has made the Alfa Pendular his home. In Lisbon, she discovered a love for stories, listening to and telling them on Avenida de Berna, at Universidade Nova de Lisboa.