Portugal to assign more land for affordable housing as prices soar

On Friday, Portugal’s parliament passed a bill that facilitates the reclassification of rural land for urban purposes and its allocation for affordable housing, a crucial initiative by the government to address an escalating housing crisis.

The legislation, which environmental organizations oppose, empowers local governments to make decisions on these reclassifications, eliminating the requirement for several public entities to provide input, unlike the current situation. A minimum of 70% of the area that is reclassified will be dedicated to public or affordable housing.

Territorial Cohesion Minister Manuel Castro Henriques stated that there will be “maximum prices for new homes significantly lower than current market prices” to prevent property speculation.

“The housing crisis in Portugal is critical; we require significantly more affordable homes for the middle-class Portuguese,” he informed parliament. In a collective statement, 21 environmental NGOs stated that the alteration would result in “serious effects on areas recognized for their natural significance and encourage arbitrary and unchecked urban growth.”

They claimed that there is no lack of urban land since over 50% remains unoccupied by homes and that “12% of all housing is unoccupied,” which translates to 720,000 vacant houses.

The housing crisis stems from a persistent lack of affordable homes, worsened by the influx of affluent foreigners drawn by residency benefits associated with property investment and tax incentives provided by the government. This issue is particularly severe in major cities like the capital Lisbon, where rents have surged by 94% since 2015, and property prices have skyrocketed by 186%, according to real estate data experts Confidencial Imobiliario.

The government currently has a spending plan totaling 4 billion euros ($4.2 billion) aimed at constructing approximately 59,000 homes by 2030 for the most disadvantaged families.

($1 = 0.9541 euros)