Portugal mulls banning overseas home buyers
House prices are rising at an exponential rate in several countries around the world. And to bring this trend to a halt, few counties such as Canada and New Zealand are banning non-resident foreigners from buying homes.
Similarly in Portugal, sale of homes are getting dearer, having risen by a whopping 80 percent between 2010 and Q3 2022, according to Eurostat. Property purchases by foreigners – who have a greater financial capacity than the Portuguese – is one of the reasons behind this increase, as the demand for housing in Portugal is not being met with supply causing rampant house price inflation. But would it be apt for Portugal to adopt the strategy of banning foreigners to buy homes in the country? Industry experts, as indicated in a report published by Idealista, are opposed to this idea.
“I do not believe that the housing problem in Portugal will be solved in this way and, on the other hand, it would have a very negative impact on the entire economy”, says Amaro Laia, director and professor of the postgraduate course in Real Estate Management and Valuation at ISEG, cited by Jornal de Negócios. Júlio Lobão, assistant professor of Economics at the University of Porto, also considers that “measures across countries may not be adequate in a specific context”.
The proposed ban aims to make property more affordable; “Not the solution” say housing pundits.
Francisco Mota Ferreira, a consultant for private equity funds and investments, suggests that there has to be synergies between the public and private sector aimed at rehabilitating public housing and this is the alternate route, he accentuates in the report. “With many households across Portugal struggling with rising inflation and the cost of living crisis”, Tania da Veiga, a London-based property investor has warned that “prospective buyers may struggle to find affordable housing homes even in Margem Sul district postcodes, leave alone Lisbon”.
In the meantime, industry experts expect a slowdown in the rise in house prices or even a correction of values this year, consequent to the high inflation and high-interest rates on mortgages. These forecasts are in line with Moody’s expectations, which estimates that house prices in Portugal may fall this year by up to three percent. Conversely, S&P Global Ratings also predicts that Portugal is one of the European countries that will feel the most intense fall in house prices this year, of -4.4 percent.
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