Portugal Needs 200 Thousand Houses, Construction on the Edge

In Portugal there is a shortage of 150 to 200 thousand houses, but the capacity of the construction sector “is at its limit”, warned several real estate developers gathered this morning at a conference to analyze the Government’s measures for housing.

This year, estimates from sector agents point to 28 thousand new homes being completed nationally.

“20 years ago, 100 thousand houses were built per year. Today, on average, 24 to 25 thousand new homes are being built, with this year reaching a peak of 28 thousand. Prices only reduce with more supply, but there is no capacity to do more”, said Manuel Maria Gonçalves, executive president (CEO) of the Portuguese Association of Real Estate Developers and Investors (APPII), during a conference on the Government’s housing package promoted by Diário Imobiliário.

The lack of labor, estimated at 80 to 100 thousand workers, the “excessive” taxation on builders and clients, which represents up to 40% of the total cost of the projects, the slowness of licensing and the launch of separate stimulus measures, lasting a legislature, are the main factors that worsen the housing crisis.

For most speakers, the measures announced by the Government in September are “ambitious” but “unfeasible”.

The reduction to 6% of the VAT rate, long demanded by the sector, “is welcome” but, as João Sousa, CEO of JPS Group, highlighted, “it may only have an effect on new constructions that will be launched in a year and a half or two years”.

Furthermore, this and other measures aimed at encouraging the supply of housing “last the duration of the political cycle”, creating enormous instability for investors, added the same promoter.

“It is a courageous measure, but it should go beyond the year 2030”, he concluded.

Madalena Azeredo Perdigão, partner at CCA Law Firm, recalled that the new reduced VAT rate, for housing worth less than 648 thousand euros, still has to be authorized by the European Commission, after passing through parliament, which could further delay its entry into force.

The Government’s new package “does not have shock measures, as we needed, because it is not immediately implementable”, considered José Rui Menezes e Castro, CEO of MAP Group.

“A shock policy would be to create conditions to make the existing housing stock available on the market”, he also said.

The announcement of the construction of thousands of new homes by the Government, using funds from the Recovery and Resilience Plan (PRR) and the European Investment Bank (EIB) was called into question by promoters.

“The numbers grow every day to have an impact, but there is no capacity to build what is announced. Each municipality works with the PRR as if it were a micro-company. There is no global structure that fits everything together, at a central level”, considered João Sousa.

Nuno Malheiro, architect, said that neither the municipalities nor the Institute of Housing and Urban Rehabilitation (IHRU) have the capacity to take advantage of the available funds, namely those from the PRR that end in 2026.

Regarding the simplification of licensing, also announced by the Government, the speakers illustrated, with concrete situations, their experience with municipal councils, noting that reducing response times is not enough.

“The same law is interpreted in different ways by municipal councils, not to mention the regulations, with their own rules. This makes it difficult and creates insecurity”, said Nuno Malheiro, for whom “simplifying means standardizing the rules” in all municipalities.

The Government’s housing package, announced in September as a “shock policy” to “shake up the construction and rental market” in the country, includes the reduction of VAT on construction to 6% on sales up to 648 thousand euros and rents up to 2,300 euros, deductions from collections on rents up to 900 euros, reduction of the IRS rate from 25% to 10% on “moderate” rents up to 2,300 euros, simplification of licensing and worsening of IMT for non-residents.