Portugal's rental market must keep pace with demand

The economic capacity of the Portugal's rental housing market cannot keep up with the rise in the purchase price of housing, a new study has indicated.

Only 26% of Portuguese reside in rented housing, according to 2019 data from Eurostat, highlighting the strongly entrenched ownership culture in Portugal. However, analysis by London-based global real estate services provider Savills, a portion of the Portuguese population in the rental market may be set to increase, thanks to the negative effects of the COVID-19 pandemic on income and greater difficulty in accessing home loans.

According to the international real estate consultancy, a report on Built-to-Rent: More than a trend, states that the supply in the rental market does not match the strong and growing demand and prices are too high for the quality of the product presented. The report has indicated in the European context, Portuguese families are the ones that contract the most debt for the acquisition of a home, estimating that, on average, they allocate around 40% of their income every month for the payment of loan instalments.

The data also reflects that there is an imbalance between the evolution of Portuguese peoples' income and the price of buying a house, with the market falling short of the financial capacity of many. The study also goes to show that the Portuguese government, in order to restore some vitality to the rental market, has activated the controlled cost housing and affordable rent programs, with the main objective of adjusting housing prices to the financial capacities of the Portuguese.

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