Many Portuguese, including the middle class, are being priced out of Portugal’s property market by rising rents, surging home prices and climbing mortgage rates.
There is a great deal of backlash to the Golden Visa programs which were set up in Europe to boost foreign investment and skim more foreign money into government coffers. While it did result in some building and some influx, the impact has been wildly overstated.
Before I’m beset with angry residents, I’ll note that last year, there were 168,000 real estate transactions in Portugal, but there have been less than 10,200 golden visas granted via real estate purchase over nearly twelve years. That’s less than 850 real estate transactions year, on average, or around 0.5% compared to the 168,000 last year.
There are, I’m sure, edge cases where a large residential building was bought, renovated, and then resold mostly to foreign investors- I’ve seen the ads. But as a driver of housing rents I’m skeptical that such a low volume has been the primary driver of rent inflation. I’m seeing ridiculous rents everywhere, and I think it’s a combination of Airbnb-style landlords snatching up inventory for short term rental income (which no private renter can afford nor private buyer/homeowner compete) as well as the condo-bros leveraging their way into tens of hundreds of units for the passive income fad that has swept most of the western world.
On top of the golden visa there are also a lot of digital nomads, who earn a US salary, while living in Portugal. These types obviously don’t mind paying a rent value that is unaffordable for 95% of the population.
Then there were the tax incentives (quite literally “pay no tax” for EU pensioneers to move to Portugal, to the point that Sweden intervened on their side bacause swedish pensioneers were using it to pay no tax anywhere), the refusal to seriously regulate AirBnB which only ended when the highest court of the land finally got around to pass a ruling on it (saying that it’s unconstitutional to turn random appartments in appartment buildings into AirBnB businesses without unanimous agreement from all tenants, as has been done for over a decade, a rulling which by the way does not automatically revert all the licenses passed by city halls for such “conversions” and thus won’t revert those accomodations back to residential) and the lowest amount of public house building since the Revolution in one of the countries in Europe with the least amount of Public Housing, all the while housing construction in general is 1/3 of what it was 30 years ago.
Basically the realestate market has been manipulate by the politicians in power by increasing the Demand (the AirBnB thing was especially bad, with for example 10% of residential units in Lisbon being taken out of the realestate market and turned into tourist accomodation businesses) and keeping Supply at historically very low levels, all of which has pushed house prices up at around 12% a year all the while average salaries went up a few percent (barelly above inflation).
Even the so-called “support measures” by government now that the problem is way beyond the possibility of keeping on ignoring it (it’s causing more than half of young graduates to leave the country and even making shops close due to too high rents), are almost all on the side of propping up a crazy overvalued market (i.e. “giving people temporary help to pay” and “lowering loan criteria” rather than meaningfully increasing supply and cutting down on investment demand)
Of course realestate “investors” won massivelly from this, and guess what is the main secondary (sometimes primary) income source of elected mainstream portuguese politicians (especially members of parliament from outside Lisbon who get a “relocation subsidy” that covers whatever their rent in Lisbon) is…
The “funny” things for me is that this growing problem was already very visible when I moved from abroad back to Portugal almost 5 years ago: for example it was already cheaper to rent in Berlin than in Lisbon, even though incomes there are 2 to 3x larger. However the “quality” of portuguese politicians in general is such that there is no strategy and they only react to events and jump on the bandwagon, so only now that shit has trully hit the fan are they talking about it whilst pretty much having remained silent to all the (pretty obvious already back then) measures that were very all very visibly pushing prices up in what was already a clearly overvalued market.
That very well could be. I’d forgotten about the D7, though I don’t know how many people are using it. The real digital nomad visa just took effect so it hasn’t caused the problem, but I’ll bet there’s a shit-ton of British (mostly) who don’t even have to blink to get a short term annuity that meets the income requirements for a D7 in Pt. And they’re definitely willing and able to pay a above market.
It is probably a combination of wealthy foreign migrants and overtourism.
Portugal had been pushing visas for remote workers around Covid similar to how a lot of poorer cities and states have been pushing for remote workers to move in. Apparently it has been very successful, causing people to get pushed of Lisbon’s city center.
Portugal has also been selling itself as a way to get a cheap European vacation in the USA, which has also helped. I know United Airlines opened up a lot of flights from Newark to various Portuguese cities. Porto has become swamped with AirBnB’s as the city shifts to a tourism economy.
Given that Portugal has economic statistics similar to Eastern Europe, I can see this pushing out Portuguese from their cities and into Newark.
I was surprised to learn Portugal was so poor. I’d be curious to know the history there. They were a powerhouse during the colonial era, so it’s interesting that they didn’t end up wealthy like most other colonial powers.
This country isn’t poor. Far from it. What there is an ingrained mentality that we can’t do any better and lately this was topped with if someone has something or does something they are instantly villains, regardless of they are honest and decent individuals.
We have old money, really old money. Some nouveau riche and a few shit for brains top CEOs that open their mouths to spout idiocy.
Paired with a mentality of “good enough is not enough” makes the average portuguese complain the world is against them and anywhere but here is better. This results in massive waves of highly qualified professionals leaving the country that needs that same people to grow.
Oh, and those who stay? “stupid”, “crazy” and “idiot” are common terms to designate them, by those who leave and even more by those who will never do anything but complain.
Well, I can tell you from decades of personal professional experience as a portuguese who also spent most of his career working in other countries in Europe that the portuguese management culture is complete total crap. Similarly the business environments is very bad, with a few politically connected giants exploiting cartel or near monopoly positions acquired through such connections (for example, mobile networks in Portugal are more expensives than in Germany whilst salaries are between half and 1/3) and in effect acting as a anchor on the neck of the whole Economy, both people and companies.
Personally I think it’s because of the complete total dominance of cronyism and nepotism in the selection of people for pretty much any well paid positions as well as for things as simple as getting licenses from city halls for business operations (were you also get lots of corruption) - certainly the so-called “cunha” (getting a job through connections) is the main path to management positions in Portugal.
Last but not least, in general the style of working in Portugal is very very low on preparation, analysis, quality measurement of outcomes and in general any kind of well organised approach to working processes, so unsurprisingly the greatest strength of he portuguese workforce is the “desenrascanço” (which roughly means “last minute improvisation as a ‘method’ of doing things”). This would be ok if it was mainly the non-managerial professionals doing, but given the above mentioned selection “methodology” for management, the very people who are supposed to amongst other things organise work activities and environments “work” like that hence are very very bad at methodical, prepared, process-based work planning (lets just say that what in other countries are “known unknowns”, in Portugal are “unknown unknowns” and even some “known knows” elsewhere are “unknow unknowns” in the typical portuguese project, so extreme is the tendency to “dive in and figure things out when we get there”).
(Mind you, portuguese workers can learn to be organised and thorough whilst keeping their advantages as “highly-trained” improvisationalists, but if you’re in an environment were “everybody works like this”, that’s not going to happen, especially because things like preparation, analysis and setting up of quality metrics do not look like “doing work” to their managers, who will push them into activities with immediate visible outputs as that’s what looks like “work” to them.
All in all the country is not meritocratic (quite the opposite), is chained down by the incestuous relationship between politics and a few giant companies and thus pulled down by the dominance of rent extraction in the Economy and the dominant work culture (by a large margin) is improvisationalism.
Unsurprisingly the strongest growth sector in Portugal is one which bypasses most of this or suffers the least when it happens: “Selling the Sunshine”, a.k.a. Tourism.
PS: Mind you, in a big Historical prespective I would say that it’s still the Post-imperial period, as that seems to last centuries: just look at places which were long ago the center of grand empires - Greecy, Egypt, Italy, Turkey and so on - or look at the decay of Britain (the previous great imperial powerer) now and over the last 5 decades. I suspect there’s some kind of society-wide shift from a Doer mindset to a Taker mindset that isn’t easilly undone - certainly Portugal has at all levels a very entrenched mindset of “You’re a sucker if you don’t take advantage of the ‘System’ whenever you can get away with it” though fortunatelly and unlike certain countries, it’s not at all like that an interpersonal level.
This, plus the fact that the last 30 years have seen an increase of 0 in real term for wages, plus a government that has done nothing over the best economic years we had from 2014 to 2019, and massive unchecked immigration(that has already received negative notes from the EU as illegal), and you have the ingredients for a nice habitation disaster, which is what this is.
Oh, and no effort to create good public transportation to connect cities to make reasonable living outside Lisbon. Or even try to push job creation out of the Lisbon district.
And this is all before we talk about all the governmental decisions that have done nothing but decimate the renting market.
Speculation has its hand, but it pales in comparison to good old fashioned mismanagement of the state.
Caused by wealthy foreign migrants or are there other factors? For some reason I’ve heard a lot of North Americans talking about moving to Portugal.
There is a great deal of backlash to the Golden Visa programs which were set up in Europe to boost foreign investment and skim more foreign money into government coffers. While it did result in some building and some influx, the impact has been wildly overstated.
Before I’m beset with angry residents, I’ll note that last year, there were 168,000 real estate transactions in Portugal, but there have been less than 10,200 golden visas granted via real estate purchase over nearly twelve years. That’s less than 850 real estate transactions year, on average, or around 0.5% compared to the 168,000 last year.
There are, I’m sure, edge cases where a large residential building was bought, renovated, and then resold mostly to foreign investors- I’ve seen the ads. But as a driver of housing rents I’m skeptical that such a low volume has been the primary driver of rent inflation. I’m seeing ridiculous rents everywhere, and I think it’s a combination of Airbnb-style landlords snatching up inventory for short term rental income (which no private renter can afford nor private buyer/homeowner compete) as well as the condo-bros leveraging their way into tens of hundreds of units for the passive income fad that has swept most of the western world.
On top of the golden visa there are also a lot of digital nomads, who earn a US salary, while living in Portugal. These types obviously don’t mind paying a rent value that is unaffordable for 95% of the population.
Then there were the tax incentives (quite literally “pay no tax” for EU pensioneers to move to Portugal, to the point that Sweden intervened on their side bacause swedish pensioneers were using it to pay no tax anywhere), the refusal to seriously regulate AirBnB which only ended when the highest court of the land finally got around to pass a ruling on it (saying that it’s unconstitutional to turn random appartments in appartment buildings into AirBnB businesses without unanimous agreement from all tenants, as has been done for over a decade, a rulling which by the way does not automatically revert all the licenses passed by city halls for such “conversions” and thus won’t revert those accomodations back to residential) and the lowest amount of public house building since the Revolution in one of the countries in Europe with the least amount of Public Housing, all the while housing construction in general is 1/3 of what it was 30 years ago.
Basically the realestate market has been manipulate by the politicians in power by increasing the Demand (the AirBnB thing was especially bad, with for example 10% of residential units in Lisbon being taken out of the realestate market and turned into tourist accomodation businesses) and keeping Supply at historically very low levels, all of which has pushed house prices up at around 12% a year all the while average salaries went up a few percent (barelly above inflation).
Even the so-called “support measures” by government now that the problem is way beyond the possibility of keeping on ignoring it (it’s causing more than half of young graduates to leave the country and even making shops close due to too high rents), are almost all on the side of propping up a crazy overvalued market (i.e. “giving people temporary help to pay” and “lowering loan criteria” rather than meaningfully increasing supply and cutting down on investment demand)
Of course realestate “investors” won massivelly from this, and guess what is the main secondary (sometimes primary) income source of elected mainstream portuguese politicians (especially members of parliament from outside Lisbon who get a “relocation subsidy” that covers whatever their rent in Lisbon) is…
The “funny” things for me is that this growing problem was already very visible when I moved from abroad back to Portugal almost 5 years ago: for example it was already cheaper to rent in Berlin than in Lisbon, even though incomes there are 2 to 3x larger. However the “quality” of portuguese politicians in general is such that there is no strategy and they only react to events and jump on the bandwagon, so only now that shit has trully hit the fan are they talking about it whilst pretty much having remained silent to all the (pretty obvious already back then) measures that were very all very visibly pushing prices up in what was already a clearly overvalued market.
That very well could be. I’d forgotten about the D7, though I don’t know how many people are using it. The real digital nomad visa just took effect so it hasn’t caused the problem, but I’ll bet there’s a shit-ton of British (mostly) who don’t even have to blink to get a short term annuity that meets the income requirements for a D7 in Pt. And they’re definitely willing and able to pay a above market.
It is probably a combination of wealthy foreign migrants and overtourism.
Portugal had been pushing visas for remote workers around Covid similar to how a lot of poorer cities and states have been pushing for remote workers to move in. Apparently it has been very successful, causing people to get pushed of Lisbon’s city center.
Portugal has also been selling itself as a way to get a cheap European vacation in the USA, which has also helped. I know United Airlines opened up a lot of flights from Newark to various Portuguese cities. Porto has become swamped with AirBnB’s as the city shifts to a tourism economy.
Given that Portugal has economic statistics similar to Eastern Europe, I can see this pushing out Portuguese from their cities and into Newark.
I was surprised to learn Portugal was so poor. I’d be curious to know the history there. They were a powerhouse during the colonial era, so it’s interesting that they didn’t end up wealthy like most other colonial powers.
This country isn’t poor. Far from it. What there is an ingrained mentality that we can’t do any better and lately this was topped with if someone has something or does something they are instantly villains, regardless of they are honest and decent individuals.
We have old money, really old money. Some nouveau riche and a few shit for brains top CEOs that open their mouths to spout idiocy.
Paired with a mentality of “good enough is not enough” makes the average portuguese complain the world is against them and anywhere but here is better. This results in massive waves of highly qualified professionals leaving the country that needs that same people to grow.
Oh, and those who stay? “stupid”, “crazy” and “idiot” are common terms to designate them, by those who leave and even more by those who will never do anything but complain.
Well, I can tell you from decades of personal professional experience as a portuguese who also spent most of his career working in other countries in Europe that the portuguese management culture is complete total crap. Similarly the business environments is very bad, with a few politically connected giants exploiting cartel or near monopoly positions acquired through such connections (for example, mobile networks in Portugal are more expensives than in Germany whilst salaries are between half and 1/3) and in effect acting as a anchor on the neck of the whole Economy, both people and companies.
Personally I think it’s because of the complete total dominance of cronyism and nepotism in the selection of people for pretty much any well paid positions as well as for things as simple as getting licenses from city halls for business operations (were you also get lots of corruption) - certainly the so-called “cunha” (getting a job through connections) is the main path to management positions in Portugal.
Last but not least, in general the style of working in Portugal is very very low on preparation, analysis, quality measurement of outcomes and in general any kind of well organised approach to working processes, so unsurprisingly the greatest strength of he portuguese workforce is the “desenrascanço” (which roughly means “last minute improvisation as a ‘method’ of doing things”). This would be ok if it was mainly the non-managerial professionals doing, but given the above mentioned selection “methodology” for management, the very people who are supposed to amongst other things organise work activities and environments “work” like that hence are very very bad at methodical, prepared, process-based work planning (lets just say that what in other countries are “known unknowns”, in Portugal are “unknown unknowns” and even some “known knows” elsewhere are “unknow unknowns” in the typical portuguese project, so extreme is the tendency to “dive in and figure things out when we get there”).
(Mind you, portuguese workers can learn to be organised and thorough whilst keeping their advantages as “highly-trained” improvisationalists, but if you’re in an environment were “everybody works like this”, that’s not going to happen, especially because things like preparation, analysis and setting up of quality metrics do not look like “doing work” to their managers, who will push them into activities with immediate visible outputs as that’s what looks like “work” to them.
All in all the country is not meritocratic (quite the opposite), is chained down by the incestuous relationship between politics and a few giant companies and thus pulled down by the dominance of rent extraction in the Economy and the dominant work culture (by a large margin) is improvisationalism.
Unsurprisingly the strongest growth sector in Portugal is one which bypasses most of this or suffers the least when it happens: “Selling the Sunshine”, a.k.a. Tourism.
PS: Mind you, in a big Historical prespective I would say that it’s still the Post-imperial period, as that seems to last centuries: just look at places which were long ago the center of grand empires - Greecy, Egypt, Italy, Turkey and so on - or look at the decay of Britain (the previous great imperial powerer) now and over the last 5 decades. I suspect there’s some kind of society-wide shift from a Doer mindset to a Taker mindset that isn’t easilly undone - certainly Portugal has at all levels a very entrenched mindset of “You’re a sucker if you don’t take advantage of the ‘System’ whenever you can get away with it” though fortunatelly and unlike certain countries, it’s not at all like that an interpersonal level.
https://giphy.com/gifs/empire-season-3-premiere-3x1-l2SpXzKHRREk2mXQc
Cada um pelo seu lado abordou ângulos diferentes da questão.
A lot of Europe’s wealth got earned during the Industrial Revolution. Portugal didn’t really participate as much as other nations did.
New constructions for habitation in Portugal over the years.
This, plus the fact that the last 30 years have seen an increase of 0 in real term for wages, plus a government that has done nothing over the best economic years we had from 2014 to 2019, and massive unchecked immigration(that has already received negative notes from the EU as illegal), and you have the ingredients for a nice habitation disaster, which is what this is.
Oh, and no effort to create good public transportation to connect cities to make reasonable living outside Lisbon. Or even try to push job creation out of the Lisbon district. And this is all before we talk about all the governmental decisions that have done nothing but decimate the renting market.
Speculation has its hand, but it pales in comparison to good old fashioned mismanagement of the state.
Unfortunately you could write this about virtually every western country and it would be accurate. There is a systematic rot at play here.