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In a dramatic twist, Lisbon finds itself grappling with a housing crisis, ranking second only to Athens in soaring housing costs among major European cities, reports Bloomberg. Fueled by incentives that attracted wealthy foreigners, Portugal's housing market is skyrocketing, leaving locals struggling to keep pace with exorbitant prices.
As of November, housing costs in Lisbon surged by 5.8%, reaching €5,426 per square meter—a staggering 30% increase over the past five years. The city now outpaces Milan, Madrid, and Berlin in property prices. Despite recent policy shifts, including the discontinuation of the "golden visa" program and changes to tax incentives, the demand from foreign buyers remains relentless, creating a housing scarcity.
The impact of the end of the 'cheap money' era is felt across Europe, affecting purchasing power, but the scarcity of housing appears to be the driving force behind rising prices in several cities. Notably, Athens leads with an annual increase of nearly 12%, followed by Stockholm, Madrid, and Milan experiencing steady upticks.
Lisbon's transformation into an investment hub began post the 2014 international bailout, marked by the removal of rent controls and the introduction of the "golden visa" program. This initiative lured overseas buyers, contributing to the economic recovery. However, the surge in foreign investment has strained the city's housing market, leaving thousands unable to secure homes.
The housing crunch is evident in the dwindling supply, hitting its lowest level in 15 years in 2022, according to Confidencial Imobiliario. With the average price of newly built houses surpassing Dublin and Brussels, Lisbon's housing dilemma is reaching critical levels.
For many Portuguese families, the dream of homeownership is replaced by expensive rentals in distant suburbs. Social housing constitutes a mere 2% of the total stock, aggravating inequality and sparking protests. Responding to the crisis, Portugal's socialist government aims to increase affordable housing and eliminate incentives for foreigners. Outgoing Prime Minister Antonio Costa acknowledges the need to curb real estate speculation, but the allure of Portugal's climate, beaches, and cost of living may pose challenges to deterring foreign interest.
In this unfolding saga, Lisbon stands at a crossroads, navigating the delicate balance between attracting investment and addressing the urgent housing needs of its citizens.
