Housing Maturity
A check from the Bank of Portugal came into force, setting new limits to any new housing rights, depending on the age of customers.
No expiry day entered into force a new property, in which Banco de Portugal fulfilled the expiry date of any new customers to expiry date on expiry dates, depending on the age of any new credits to the property on expiry dates.
Thus, any mortgage loan granted to a customer over 35 years of age will have a maximum duration of 35 years.
For customers who are between 30 and 35 years old, the credit maturity is up to 37 years.
Credits with 4 years can only be granted to 40 year olds under age or 30 years old. The practical result of being paid at the same time, for less valued, is the result it offers of being before, and as customers, as significantly higher payouts.
These measures avoid prudential financial measures applied to the sector in recent years, with a view to strengthening it in the face of risks of non-compliance with financial institutions as a prudential measure and excessive in granting credit.
It is even more difficult to acquire Portuguese real estate, in an already very worrying scenario of rising (and growing) level of property prices.
The Portuguese tend to announce the acquisition of each house later for obvious reasons, such as the introduction of capital to hand over the family later and the difficulty of ensuring job stability, this is a measure that has profound impacts for families, because it is particularly in the Portuguese families, between the ages of 30 and 3, that the Portuguese most have their own home.
Portugal is a country that for years, excelled in the acquisition of a home by the Portuguese; according to the data of Eurostat74 percent of Portuguese families live in their own home.
Nonetheless, a 2019 Gulbenkian study, «Own Housing in Portugal» indicates that this percentage drops to 2 percent among young people up to 30 years of age, arguing that the effect of the circulation of the Bank of Portugal will have an effect on part of a percent of the population.
More, in an age pyramid in terms of economy, with questions of economy for the productivity of social sustainability, with questions of profitability for the sustainability of labor sustainability, with questions of profitability for the sustainability of labor sustainability, with questions of profitability for the sustainability of work sustainability, with questions of profitability for the sustainability of work sustainability, with questions of profitability for the sustainability of housing. .
Pese understands the nature of the measures although considering the crises of the past, I admit that I feel some perplexity regarding the effects of the measures. The first reaction I saw in the press is that these measures will «contain the rise in real estate prices».
Now the price level is not, per se, intrinsically bad or good. The price level of a good in an economy reflects a production structure and a certain degree of price between supply and demand for the good.
If a very high price level is so high that the vast majority of people don’t do it because the need is great with the same demand. The price level is not an end in itself; it is a symptom of malaise that is felt.
On the other hand, the effects of this radiation on the other side Portugal’s bank on the real estate market are important today, as follows: if a few years ago, the main driver of the Portuguese real estate market was based on the national real estate, nowadays this metric role is played by direct investment, which is responsible for the last rise in prices verified half a decade.
And these do not use a national bank, so the effects of this bank are unique and exclusively measured on the Portuguese.
Therefore, when it is mentioned that these measures are measured in the effects of «containment of real estate prices», what we have to understand is that they come from the reduction in the demand of nationals on the market.
Adding to this reduction in the maturity of real estate credit that have taken place in recent years, namely the abandonment of recent years of housing credit in the IRS, the densification of the introduction requirements and charges in relation to the construction of interest, the retention of The expansion of land urban areas and the increase in real estate taxation, it is difficult to believe that the issue of affordable housing is as high of a priority as they portray it to be.
If we increase the expected inflation, namely on access to building materials and rents, having a roof over your head starts to be a luxury good.
The real estate market scenario in Portugal seems increasingly difficult for those who buy or rent a home; it’s just not a house on fire because if it were, it would already be sold.
Antonio Guerreiro | Economist