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Lisbon and Porto Need 70,000 New Homes a year

11 September 2018

Despite the licensing of new homes growing at a rate above 20%, supply is still far from meeting market needs.

The president of the Portuguese Association of Realtors and Real Estate Agents (APEMIP), Luís Lima, believes that the level of existing demand in both Lisbon and Porto requires the construction of 70,000 new homes per year. While the issuance of licenses for new housing has been growing at a rapid clip, the pace is nevertheless lagging far behind what the market needs.

During discussions regarding changes to housing policies and the rental law as it currently exists, a convergence in the thinking of the various parties in the Government and the opposition was noted. Although the disparate groups disagree as to the best path forward, they all recognise that the problems that the housing sector is facing will only be resolved or ameliorated with a significant increase in the supply of homes. However, such an increase will necessarily take some time to materialise.

According to a report on Housing Statistics that was released on Monday by the Association of Civil Construction and Public Works Industries (AICCOPN), just in the first half of 2018, Portugal’s city councils issued 7,329 licenses for new builds and the rehabilitation of existing residential buildings, “which translates into an increase of 20.7% year-on-year.” The growth was much more impressive when analysing just the number of new builds, which rose 35.7% year-on-year to a total of 9,688 new homes. This number exceeded the total number of licensed dwellings during all of 2014 when 6,785 homes were licensed.

Looking at other statistics, such as those published by Confidencial Imobiliário, which tracks the number of energy pre-certificates issued by ADENE, which are required for municipal licensing, almost 50,000 new homes entered the licensing phase in the last year and a half, at the national level. According to the databank, 49,400 homes in Portugal began the licensing process between January 2017 and June 2018. Of those, about 80% were for new builds, while the remaining 20% (10,100 homes) were linked to rehabilitation projects.

The Metropolitan Area of Lisbon is home to 25% of the new builds launched in the last year and a half in Portugal, while the Porto Metropolitan Area accounts for another 13%. While they account for the lion’s share of the new licensing, both cities are also suffering from significantly higher levels of demand. Luís Lima argued that the two respective city councils would have to take on a much more interventionist role: “The Lisbon and Porto city councils have land holdings that should be sold at discounted prices to encourage the construction of homes for young people and middle-class families,” the president of APEMIP stated.

Mr Lima added that he does not believe that the ambitious package of measures announced by the Portuguese government within the New Generation of Housing Policies (NGPH) has had any effect on the Portuguese residential market. One of the main measures concerned the need to provide housing with “affordable rents,” which, the government argues, means homes with rents that are 20% below the current market prices. This would require convincing public and private landowners to lower their rents to gain access to tax incentives. While many have stated their belief that the potential incentives will never be sufficient to persuade property owners to lower their rents, the legislative package is still under discussion in Portugal’s National Assembly.

The Assembly will take up negotiations on the more than 20 decrees and bills that are on the table later this week. The legislative body has also scheduled, for September 21st, a new parliamentary consideration of the decree regulating tenants’ right of preference, which was vetoed by the President of the Republic.

Original Story: Público – Luísa Pinto and Rosa Soares

Photo: Paulo Pimenta

Translation: Richard Turner