This year, estimates from industry players indicate that 28,000 new homes will be completed nationwide.

"Twenty years ago, 100,000 homes were built per year. Today, an average of 24,000 to 25,000 new homes are built, with a peak of 28,000 this year. Prices will only fall with more supply, but there's no capacity to do more," said Manuel Maria Gonçalves, CEO of the Portuguese Association of Real Estate Developers and Investors (APPII), during a conference on the government's housing package hosted by Diário Imobiliário.

The labour shortage, estimated at 80,000 to 100,000 workers, "excessive" taxation on construction companies and clients, which can represent up to 40% of the total cost of projects, the slow pace of licensing, and the implementation of isolated stimulus measures lasting the entire legislative term are the main factors exacerbating the housing crisis.

“Ambitious”

For most speakers, the measures announced by the government in September are "ambitious" but "hardly feasible." The reduction to 6% of the VAT rate, long demanded by the sector, is "welcome," but, as João Sousa, CEO of JPS Group, pointed out, "it may only have an impact on new construction projects that will be launched in a year and a half or two years."

Furthermore, this and other measures aimed at encouraging housing supply "are limited by the political cycle," creating enormous instability for investors, the same promoter added. "It's a bold measure, but it should extend beyond 2030," he concluded.

Madalena Azeredo Perdigão, partner at CCA Law Firm, noted that the new reduced VAT rate, for homes valued at less than €648,000, still needs to be authorized by the European Commission after being approved by Parliament, which could further delay its entry into force.

The government's new package "doesn't have the shock measures we need because it's not immediately implementable," said José Rui Menezes e Castro, CEO of MAP Group. "A shock policy would create conditions to make the existing housing stock available on the market," he added.

The government's announcement that it will build thousands of new homes with resources from the Recovery and Resilience Plan (RRP) and the European Investment Bank (EIB) has been questioned by developers.

"The numbers are growing every day to have an impact, but there's no capacity to build what's announced. Each city hall works with the RRP as if it were a micro-enterprise. There's no global structure that fits everything together at the central level," said João Souza.

No capacity

Architect Nuno Malheiro said that neither municipalities nor the Institute of Housing and Urban Rehabilitation (IHRU) have the capacity to take advantage of available funds, particularly those from the PRR (Reform Reform Program), which expires in 2026.

Regarding the simplification of licensing, also announced by the government, the speakers illustrated their experience with municipal councils with concrete examples, emphasizing that reducing response times is not enough.

"The same law is interpreted differently by municipal councils, not to mention the regulations, which have their own rules. This makes things difficult and creates uncertainty," said Nuno Malheiro, who believes that "simplification means standardizing the rules" across all municipalities.

The Government's housing package, announced in September as a "shock policy" to "shake up the construction and rental market" in the country, includes a reduction in VAT on construction to 6% on sales up to 648,000 euros and rents up to 2,300 euros, tax deductions on rents up to 900 euros, a reduction in the IRS rate from 25% to 10% on "moderate" rents up to 2,300 euros, simplification of licensing and an increase in IMT (Immodate Property Tax) for non-residents.