Portuguese families face affordability crunch
Since 2015, Portuguese families' financial effort to acquire a property has increased by more than 50%, the biggest increase in the European Union.
Data from the Organization for Economic Cooperation and Development (OECD) revealed that, in 2023, the discrepancy between house prices and family income in Portugal has reached 150.9, indicating an increase of almost 51% since 2015.
It is the highest increase among European Union countries, excluding Cyprus and Malta, for which no data is available. In comparison, the index in the euro zone stood at 109, representing an increase of 9% over the same period.
The situation is not new, but the recent worsening has worried European authorities. The European Commission, in its annual assessment of Member States, highlighted the shortage of affordable housing in Portugal as a “growing concern”.
House prices slow down
Meanwhile, new data by the National Statistics Institute (INE) showed that house prices increased 7.0% and the number of transactions diminished by 4.1% in the 1st Quarter 2024.
The decrease in house prices represents a slowdown of 0.8 percentage points compared to the previous quarter and a slowdown of 1.7 percentage points compared to the same period last year,
The data also revealed that the sale of houses to international buyers fell by around 20% at the beginning of 2024 compared to the previous quarter.
33,077 homes were sold in Portugal in the first quarter of 2024, 4.1% less than the same period last year and 3.1% less than the previous quarter. It is also observed that this drop in house transactions was more significant for foreign buyers than for Portuguese buyers: 11.9% less year-on-year and 22.4% less compared to the previous quarter for buyers residing in countries outside the EU, versus 3.1% less year-on-year and 1.6% less compared to the previous quarter for Buyers residing in the national territory.
These numbers show a clear drop in the sale of houses in Portugal to foreign citizens at the beginning of 2024, such that Portuguese people now represent 93.8% of the total number of transactions, “the highest relative weight since the first quarter of 2022”, highlights the institute. You have to go back to spring 2021 to find such a low number of homes sold to foreigners.