Housing costs in Portugal have not stopped increasing, not even during the pandemic. Right afterwards, there was a widespread price increase due to inflation, which pushed up interest rates on housing loans. In this context, Portugal saw a worsening of the housing cost burden among low-income families, making it one of the OECD countries where this burden has deteriorated the most since 2019.
Five years ago, 13.8% of low-income households in Portugal already felt a burden from housing expenses. In other words, a considerable percentage of families within the 40% poorest income bracket were already spending more than 40% of their disposable income on housing costs.
The latest report, How’s Life? 2024 by the Organisation for Economic Co-operation and Development (OECD), reveals that by 2022, the proportion of low-income households in Portugal overburdened by housing costs had risen to 19%. This means that within the most vulnerable households, the housing cost burden increased by 5.2 percentage points (p.p.) in just four years.
Portugal experienced the third largest increase in housing cost burden among OECD countries with available data from 2019 to 2022. Only Hungary, with a rise of 17.2 p.p., and Lithuania, with 8.6 p.p., showed greater increases, according to the report published on Tuesday, 5 November. It is worth noting that 2022 was the year when the rising cost of living due to inflation began to be felt, ultimately driving up interest rates on housing loans.
“Low-income families are particularly vulnerable when a large portion of their income is dedicated to housing costs,” says the OECD.
“In OECD countries, in 2022, nearly one in five households within the bottom 40% of the income distribution spent more than 40% of their disposable income on housing costs (i.e., rent or mortgage payments),” highlights the organisation in the report, indicating that the average housing cost burden increased by 0.4 p.p. per year over the period analysed.
“Low-income families are particularly vulnerable when a large portion of their income is dedicated to housing costs, as this limits spending on other essential goods and services, such as food, healthcare, and education,” the OECD further explains.
On the other hand, the data also reveal that several OECD countries have seen fewer low-income households facing high housing cost burdens. This was the case for Estonia, Italy, Poland, and Greece, for example.
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