Access to housing in Lisbon is the worst in the Iberian Peninsula

Buying a house in Lisbon is more difficult than in any other city in Portugal and Spain. This is the main conclusion of the Century 21 Portugal study, which indicates that the effort rate to acquire a home in Lisbon is 67%, the highest in the Iberian Peninsula. Also with regard to rent, Lisbon stands out for offering the most incompatible rents with families' available income.

"When accessing housing, Portuguese families are forced to make an exponentially higher effort rate than their Spanish counterparts," the statement sent to news outlets reads.

In Spain, buying a 90 m2 house exceeds the recommended effort rate of 33% only in Barcelona (34%), and is at the limit in Palma de Mallorca (33%) in 2022. In the other large Spanish cities, even in the metropolitan areas of Madrid and Barcelona, the effort to buy a house at the 20% level or less.

In Portugal, the reality is very different. In Lisbon, buying a house requires an effort rate of 67%, in Porto 50% and in Faro 39%. With the exception of the capitals of most of the councils in the Lisbon Metropolitan Area and Oporto and the Algarve, the remaining district capitals have an effort rate of 30 percent or less, with most of the cities placing the effort for home purchase at around 20 percent, the study indicates.

The truth is that the effort rate to buy a house is lower than recommended (33%) in 15 of the 18 district capitals. Guarda has the lowest effort rate to buy a house (13%) in the country.

In Portugal, "the great challenge of access to housing in the metropolitan areas of Lisbon, Porto and the Algarve, which together have the highest demographic concentration in the country. The trend towards the concentration of families in these urban areas is causing an increase in demand and greater pressure on the supply of housing that is already insufficient and poorly suited to the middle classes in these regions," explains Ricardo Sousa, CEO of Century 21 Ibérica, quoted in the same document.

Photo by Theo Decker on Pexels

Renting a house in Portugal is also difficult in Lisbon and Porto

The rental market is seen as an alternative to buying a home by many. But also renting a house is very expensive in the big urban centres of Lisbon and Porto, so rent also weighs heavily on the net disposable income of Portuguese families.

In Portugal, the effort rate to rent a house exceeds 50% in the metropolitan areas of Lisbon and Porto, in the Algarve, and in the capital and city of Porto. In Faro, the rental effort rate is 45%.

"In nine district capitals, family income does not allow them to rent a 90 m2 house, which means opting for smaller houses. At the limit are the 50 m2 observed in Lisbon, a trend also visible in the average of the metropolitan areas of Lisbon and Porto," they explain in the study.

"Besides Porto, in other cities in the country, such as Braga, Aveiro, Coimbra, Setúbal and Faro obtaining a rent adequate to income implies access to houses with less than 90 m2", they further explain, noting that in interior cities the available income allows renting houses with areas equal or superior to 90 m2, with a maximum of 130 m2, in Beja.

Already in Spain, the effort rate to rent a 90 m2 house is highest in Barcelona (40%) and in Madrid (33%), which is at the limit. In the other large Spanish cities, "the option to rent means allocating less than 30% of disposable income, a trend observed in the vast majority of municipalities in the metropolitan areas of Madrid and Barcelona", indicates the study. Merida has the lowest rental effort rate(16%).

Photo by Monstera on Pexels

Why do the Portuguese have more difficulties in accessing housing than the Spanish?

Century 21 began by explaining in the study that the high level of difficulty that the Portuguese experience in accessing housing reflects the inadequacy of the existing supply of properties to the income level of Portuguese families", considering that it is "indisputable" that the solution to resolving the accessibility of housing in Portugal lies in increasing the supply of properties to buy and rent that are compatible with family income.

In addition, the same study notes that other elements have been identified that explain the "marked differences" in the effort rates that separate the Portuguese and the Spanish in terms of access to housing. "When you look at the two Iberian capitals, you find that Madrid and Lisbon are incomparable in geographical terms. The city of Madrid occupies an area six times greater than Lisbon and has a lower population density [of 5,208 inhabitants per km2] than Lisbon [5,455 inhabitants per km2]", explains Ricardo Sousa.

And "the analysis of the respective metropolitan areas shows that the AMM has a higher population density than the AML, which demonstrates that there is a clear opportunity to develop and attract residents from Lisbon to other municipalities of the AML, based on the implementation of integrated urban mobility infrastructures, in a metropolitan logic. Madrid also has a much higher supply of properties aimed at the middle class compared to Lisbon, where the problem of the lack of housing adequate to family income prevails over all other trends and further accentuates the divide between the various indicators analysed," explains the CEO of Century 21 Ibérica.

 "The lower availability of housing stock, for purchase or rent, in line with the financial capacity of households, low income and higher tax burden are the main challenges that Portuguese families face in accessing housing," concludes Ricardo Sousa.