Along with Luxembourg, Germany and the Netherlands, Portugal is part of a small list of OECD countries that are not containing the explosion in house prices.
Portugal is among the countries with the worst housing affordability ratio in OECD economies and faces a further acceleration in house prices.
According to an article published in the magazine Finance and Development of the International Monetary Fund (IMF), the country is part of a small group that was unable to contain the pace of market appreciation residential real estate in the post-pandemic period, joining the Netherlands, Luxembourg and Germany.
The study, conducted by Enrique Martinez Garciaan economist at the Dallas Federal Reserve, points to a “new global wave of price exuberance” similar to the one that preceded the 2008-2009 financial crisis.
Despite regulatory efforts to limit speculative bubbles, in Portugal house prices continue to grow above fundamental market variables such as disposable income.
The analysis uses data from the Dallas Fed’s International House Price Database, which monitors signs of housing “exuberance” through the evolution of real prices and the price-income relationship.
These indicators point to a 55% increase in real prices of homes in Portugal since 2005, while per capita disposable income rose just 9% in the same period.
Recent data from the National Statistics Institute shows that house prices in Portugal grew 9.8% in the third quarter of 2023 compared to the previous year, reaching a new record.
The European Commission also expressed concern, warning that the disproportionate increase in prices in relation to income, driven by foreign investment and limited supply, requires “close surveillance”, cites the .
The IMF highlights that as the price-income ratio increases, access to finance is reduced, which can limit demand and cause a correction in prices.
However, the article highlights that current macroprudential rules may not be sufficient to prevent risks of housing bubbles and suggests more robust international coordination, specific financial instruments for the housing sector and attention to global capital flows.
