In its ‘Economic Survey’ of Portugal, which analyses the country’s economic performance, the Organisation for Economic Co-operation and Development (OECD) states that “previous reforms aimed at boosting rental housing supply have had only limited success due to persistent regulatory fragmentation,” the freezing of rents before 1990, and “frequent policy changes creating uncertainty for investors,” the analysis concludes.

In a sub-chapter dedicated to energy efficiency, the OECD notes that, “despite Portugal’s mild climate and overall low energy demand,” the poor quality of housing “contributes to high levels of energy poverty” and “harms people’s health and well-being.”

In its initial diagnosis of the housing crisis in Portugal, the OECD highlights the “weak investment in housing in recent decades,” the increase in land prices and construction costs, the “shortage of skilled labour,” and the delays and complexity in obtaining building permits.

For example, the number of days to obtain a building permit in 2023 ranged from 272 in Funchal to 548 in Coimbra, being 545 in Lisbon and 453 in Porto.

Furthermore, the housing stock, “one of the largest” in the OECD in percentage terms, proves to be “inefficient,” since the number of houses not used as primary residences – because they are vacant (12% of dwellings in 2021) or are used as holiday homes (19%) – “is the highest” among the organization’s countries.

This scenario was also observed in the centre of Lisbon, where 14.9% of properties were vacant, and 9.3% were used as holiday homes in 2021.

Despite the Government and many municipalities having increased investment in recent years, “the social housing stock was among the lowest in the OECD in 2022.”

In 2022, Portugal allocated approximately 0.1% of its GDP to social housing, according to the report.

The mismatch between supply and demand in the housing market is explained by a 13% increase in the number of households between 2010 and 2023, “reflecting a trend towards smaller households.”

Furthermore, the “comparatively low property prices,” compared to international standards, encouraged demand from foreign citizens, representing “approximately 10% of the total value of real estate transactions between 2019 and 2024.”

Demand from foreigners was concentrated “in more expensive properties, reflecting the relatively higher purchasing power and the minimum investment requirements” demanded by the so-called ‘golden visas’.

The tourism growth also increased the demand for housing, as did the “expansion of short-term rentals.”

“In Lisbon, for example, the number of properties advertised on Airbnb rose from 18,277 in September 2019 to 21,181 in December 2024, corresponding to approximately 7.6% of all housing in the urban area,” the study emphasises.