According to the latest report by Deutsche Bank Research, “World’s Prices 2019”, the ability of a household to pay their rent (i.e. the so-called rent-to-income ratio) is over 50% in Lisbon, taking into account the average monthly net salary for a couple (€1,814/month) and the average rent for a two-bedroom apartment (€906/month). This ratio is higher in Lisbon than in other major international cities such as London (39%), Madrid (33%), New York (31%) and Zurich (21%).
Furthermore, a recent study published by the renowned Munich-based, Ifo Institute for Economic Research, states that Portugal is the European real estate market with the shortest supply of new housing, with an average of 1.5 new houses per 1,000 inhabitants (the lowest ratio amongst the 19 European countries analysed in this study).
Finally, the 2020 report on Portugal released by the European Commission on 26 February 2020 warns that rising housing prices “increase the financial pressure on households and create issues of affordability”. The European Commission also points out that the “state’s investment in social housing has traditionally been weak” and states that the public housing supply in Portugal now accounts for 2% of the total housing supply, against 5% in the EU as a whole.
These results from multiple studies and reports reinforce the urgent need to increase the supply of new housing for Portuguese families, either to sell (BTS) or to rent (BTR). However, the high costs that developers must bear in Portugal (namely the VAT tax at 23% and the rising construction prices) combined with the slow planning and administrative processes are curbing the surge of new projects for local families at affordable prices.