The Minister of Economy and Territorial Cohesion, Manuel Castro Almeida, stated this Tuesday that the first reductions in house prices and rents should begin to be felt at the end of 2026. The government official argued that the Government’s measures in the area of housing are already underway and that their effects will begin to be visible in just over a year.
According to Notícias ao Minuto, Castro Almeida was speaking on the sidelines of the Millennium Talks COTEC Innovation Summit event, which took place at the Lisbon International Fair (FIL), where he addressed the impact of the Executive’s recent proposals. “This issue took years to get worse and it will now take us a few years to resolve it, but it will take a few years, it will not be resolved overnight. I think that, from the end of next year, differences in house prices and rents will begin to be felt”, declared the minister.
The government official acknowledged that the housing crisis is “a gigantic problem”, but guaranteed that the Government is responding “with a set of measures never seen before”, pointing to the combination of tax incentives and increased supply as the way to reverse the upward trend.
Measures to stimulate supply and lock down prices
According to Notícias ao Minuto, Castro Almeida highlighted three fundamental axes in the Executive’s strategy: the increase in the supply of land through the new land law, the reduction of VAT on construction and the IRS for landlords, as well as the reinforcement of public construction.
The minister also revealed that the Government will create a line of credit with support from the European Investment Bank (EIB) to allow local authorities to establish housing lots, in order to facilitate access to self-construction. This measure, he explained, aims to balance the market and reduce dependence on private supply, which has been limited by high costs and bureaucracy.
Reduced VAT and “moderate income” until 2029
The Prime Minister, Luís Montenegro, had already announced at the end of September the reduction of VAT to 6% in the construction of houses for sale up to 648 thousand euros or, in the case of rental, for houses with rents up to 2,300 euros. The tax regime, which also covers the rehabilitation of buildings intended for rental, should remain in force until 2029, covering both the private sector and public housing projects.
According to the publication, this measure aims to alleviate construction costs and increase the competitiveness of the rental market, considered essential to retain young people and middle-income families.
Criticisms and reservations about the Government’s measures
Despite the minister’s optimism, not everyone shares the same perspective. The Association of Tenants and Condominium Owners of Northern Portugal (AICNP) considered that the measures “accelerated the crisis” and could “further deregulate the market”, warning of the risk of a slow and uneven recovery between regions.
Prices continue to rise for now
While the measures have no effect, housing prices continue to rise. According to the National Statistics Institute (INE), the Housing Price Index increased by 17.2% in the second quarter of 2025, accelerating compared to the previous three months. Existing homes increased by 18.3%, while new homes increased by 14.5% between April and June.
Compared to the previous quarter, the index grew 4.7%, which, according to Notícias ao Minuto, reflects the persistent pressure in demand and the scarcity of available supply, especially in metropolitan areas.
The challenge of the coming years
With the market still on the rise, the Government is betting that structural changes, such as reduced VAT, the creation of municipal land and the incentive to rent, will take effect from 2026. Until then, the priority is to accelerate construction and simplify urban processes, so that the “differences” announced by Castro Almeida begin, in fact, to be felt.
Also read:
