Unlocking Solutions: Portugal's New Government Plan to Address Housing Crisis

In stark contrast to the Eurozone average, Portugal has seen a significant surge in housing prices over the past year, ranking third highest among Eurozone countries. While economies like Germany, France, and the Netherlands witnessed their first declines since at least 2017, Portugal stood out with an 8.2% increase in housing costs, trailing only behind Croatia (12%) and Lithuania (9.2%), according to recent Eurostat data. A January study by the IMF echoed this trend, highlighting Portugal as the European country with the highest housing price variation since 2023.

The Eurostat data for 2023 marks the tenth consecutive year of housing price increases in Portugal, albeit at the mildest rate in the past five years. In contrast, Germany, amidst economic contraction, witnessed housing prices drop by over 8%.

Responding to this ongoing challenge, the new government unveils a robust plan aimed at tackling the housing crisis. Here are the key measures outlined in the government's program, submitted on April 10, 2024, to the Parliament:

1. Revocation of "Erroneous Measures" from Mais Habita??o: The government intends to repeal what it deems as "erroneous measures" from the Mais Habita??o program, including forced leasing, rent freezes, and "penalizing measures" for local accommodation, among others.
2. Support Program for Youth First-Time Homebuyers: Recognizing the hurdles faced by young individuals in purchasing their first homes, the government proposes a support program aimed at easing entry barriers for this demographic.
3. Expansion of Porta 65 Limits and End to Frozen Rents: The government plans to increase the scope of the Porta 65 program and put an end to frozen rents, aiming for a more dynamic and inclusive housing market.

These measures underscore the government's commitment to mobilizing society towards fostering a robust supply of affordable housing in both the rental and ownership markets. Moreover, the government rejects administrative price controls or rent freezes as viable solutions, instead advocating for a holistic approach centered around sustainable urban development and social cohesion.

The housing policy of the new government is structured around three strategic pillars:

v? Increase in Housing Supply (Private, Public, Cooperative): To ensure the expansion of the housing stock, the government aims to facilitate land use, density, and construction requirements, promote agricultural housing, inject unused public properties into the market, and implement tax incentives for construction and rehabilitation.

v? Stability and Confidence in Rental Markets: Recognizing the pivotal role of rental markets, the government seeks to restore confidence by evaluating recent reforms, expediting dispute resolution mechanisms, and exploring insurance mechanisms for landlords and tenants.

v? Support for Youth in Homeownership: Aiming to alleviate financial burdens on young homebuyers, the government plans to eliminate property acquisition taxes for individuals under 35 and provide public guarantees for mortgage financing.

As Portugal charts a course towards sustainable urban development, the government's housing policy embodies a forward-thinking approach that prioritizes affordability, accessibility, and inclusivity. By fostering collaboration between public and private sectors, leveraging innovative housing concepts, and promoting balanced urban planning, Portugal seeks to address the housing crisis and build vibrant, resilient communities for all its residents.

Individuals and organizations navigating the housing landscape can rely on trusted partners like Eres Relocation Portugal for guidance and support. With a proven track record in international mobility services, Eres Relocation Portugal stands ready to assist clients in navigating the intricacies of relocation, ensuring a smooth and seamless transition to life in Portugal.

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