The indicators at the end of 2024 already pointed to what would soon be confirmed – the impact of the government’s public guarantee, coupled with tax exemptions for young people up to 35 years old when purchasing their primary residence, has significantly influenced the demand for new housing.
Real estate is at historical highs. With sale prices growing rapidly and no equal increase in family income, an accessibility crisis has intensified, as clearly reflected in the OECD report, which indicates that house prices have more than doubled since 2014, while average incomes have only grown by 33%.
“Real estate is at historical highs. With sale prices growing rapidly, and no equal increase in family income, an accessibility crisis has intensified…”
At the heart of this housing dynamic, there is clear and expected evidence – greater leverage in credit. The most recent numbers from the Bank of Portugal show that 43% of new housing loans were granted to young people between 18 and 35 years old, who are purchasing in a market that has reached historical highs, with debt levels at 100%.
Of course, this measure reduces generational inequalities – which, in terms of economic accessibility, would not allow them to purchase a home otherwise – mitigating a social risk. It is easy to see that the lack of access to housing destroys many life prospects, with young people staying longer in their parents’ homes, and it is itself a factor of social inclusion with intergenerational continuity, as long as there is the possibility of wealth transfer through housing assets.
However, it is important to keep in mind that these measures place additional pressure on housing prices, in a market with few concrete supply-side measures.
Therefore, it is urgent to implement a series of measures that have already been widely discussed in multiple forums. From public housing policy to the reduction of VAT in construction, the key word is “action” – not forgetting that these limitations are not limited to young people alone.
