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Buying and renting a house in Portugal?

Stress rate skyrockets in 4 years. Weight of the cost of housing on family income rose in almost all major cities,


The prices of houses to buy and rent continue to rise in Portugal, as well as interest rates on home loans. But family incomes do not follow this evolution, with the aggravation of high inflation that reduces purchasing power and savings capacity. From this macroeconomic and financial imbalance, a reality emerges: housing costs weigh more and more on disposable income, a trend that has been observed over the last four years in almost all district capitals. The effort required to rent a house in Portugal increased by 2 percentage points (p.p.), from 69% in the first quarter of 2019 to 71% in the first quarter of 2023. As for home buying, the national effort rate increased by 23 points, rising from 30% to 53% since 2019.


Families living in Portugal are finding it increasingly difficult to cope with the high cost of housing, whether buying or renting. On the one hand, interest rates are rising on home loans, making it more expensive to purchase a home in our country, where, by the way, homes are already being sold at high prices. And, on the other hand, the supply of houses for rent is structurally scarce in the country, also causing rent prices to skyrocket - at least in homologous terms. Creating more affordable housing is, in fact, the main promise of the Government with the More Housing measures now under discussion in the parliamentary specialty.


In a context where the housing crisis is in the air and many families are suffocated by housing costs, this research compared the effort rates for buying and renting a T2 apartment between the first quarter of 2019 (before the pandemic) and the first quarter of 2023. And it concluded that in just four years, the effort to pay for the house skyrocketed in virtually all Portuguese district capitals.

Renting a house with more effort than recommended

Of the 20 cities analyzed (14 with available data), it was in Faro where the rate of effort to rent the house increased the most in the last four years, from 45% in the first quarter of 2019 to 68% in the same period of 2023 (+23 p.p).

Among the biggest increases in effort rates to rent a house in four years are Porto (20 p.p.), Funchal (19 p.p.), Viana do Castelo (17 p.p.), Setúbal (15 p.p.), Viseu (15 p.p.), Santarém (14 p.p.), Ponta Delgada (10 p.p.), Lisbon (10 p.p.), Castelo Branco (10 p.p.), Leiria (9 p.p.), Coimbra (9 p.p.), Aveiro (8 p.p.) and Braga (8 p.p.).


Lisbon is the city that requires the greatest effort on the part of families to rent a house, with 82% of their income having to be allocated in the first quarter of 2023. This is followed by Funchal (75%), Porto (74%), Faro ( 68%), Setúbal (53%), Ponta Delgada (52%), Évora (51%), Viana do Castelo (51%), Aveiro (50%) and Braga (49%).

The cities where house rents weigh less on family income are Castelo Branco (34%), Coimbra (40%), Santarém (41%), Leiria (43%) and Viseu (43%). It should be noted that all district capitals had effort rates higher than recommended, 33%.



Buying a house: effort rate with increased interest on mortgage loans

In the case of the purchase of housing, the effort rates worsened even more in almost all district capitals in the country. This is because interest rates on home loans are at the highest levels of the last decade, after the European Central Bank (ECB) increased the refinancing rate to 4%, the highest value since 2008.

It was even in Funchal where the percentage of income that families must allocate to buy a house rose the most, rising from 38% in the first quarter of 2019 (before the pandemic) to 78% in the first quarter of 2023 (+40 p.p.).

Effort rates to buy a house also rose by more than 10% in most of the 20 district capitals analyzed. This is followed by increases in the effort rate in Faro (37 p.p.), Ponta Delgada (33 p.p.), Aveiro (32 p.p.), Porto (24 p.p.), Braga (23 p.p.), Viana do Castelo (23 p.p.), Évora (23 p.p.), Leiria (18 p.p.), Lisbon (18 p.p.), Setúbal (18 p.p.), Coimbra (16 p.p.), Vila Real (16 p.p.), Viseu (15 p.p.) and Santarém (11 p.p.).

The cities where the rate of effort to acquire a house grew the least between these two moments were Guarda (4 p.p.), Castelo Branco (4 p.p.), Bragança (6 p.p.) and Beja (7 p.p.). In this period, there was only one exception: in Portalegre, the weight of the mortgage on income fell by 2 percentage points (from 15% to 13%), reveals the same study by idealista.

At the beginning of 2023, the city with the highest rate of effort to buy a house was Funchal (78%), followed by Faro (73%), Lisbon (72%), Porto (63%), Aveiro (58%), Ponta Delgada (50%), Braga (46%), Viana do Castelo (44%) and Évora (43%). With effort rates below 40% and above the recommended 33% are the cities of Leiria (36%), Setúbal (35%), Coimbra (35%) and Viseu (35%).

On the other hand, it turns out that there are seven district capitals where it is possible to buy a house with an outlay rate lower than the recommended 33% (in which the mortgage weighs less than a third of the family's disposable income): Vila Real (30%), Santarém (23%), Bragança (20%), Beja (20%), Castelo Branco (16%), Portalegre (13%) and Guarda (13%).


Fonte: Idealista

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