The International Monetary Fund (IMF) has warned that government measures designed to help young people purchase homes in Portugal may be contributing to the country’s housing crisis.

According to reports by idealista and Jornal de Negócios, the IMF said support measures such as public mortgage guarantees and tax exemptions on Municipal Property Transfer Tax (IMT) and Stamp Duty (IS) risk worsening existing market pressures by stimulating demand without addressing supply shortages.

The assessment forms part of the IMF’s annual evaluation of the Portuguese economy under Article IV, which reviews the economic conditions of member states.

In its final declaration, released on 6 May, the IMF stated that measures supporting first-time homebuyers “aim to improve affordability” but are not currently subject to means testing, while also “stimulating demand and contributing to the worsening of imbalances.”

The organisation suggested that support for young buyers purchasing a primary residence should be tied to income and asset levels, similarly to other social benefits.

Housing demand continues to rise

The IMF also highlighted broader pressures affecting Portugal’s housing market, arguing that demand has increased significantly due to demographic changes, rising incomes and sustained foreign demand.

According to the report, housing supply has failed to keep pace with demand, contributing to rising property prices and affordability concerns across the country.

The IMF said solutions should focus on increasing the availability of housing, including facilitating the construction of new homes and encouraging owners of vacant properties or short-term rental accommodation to place homes on the long-term rental market.

Housing affordability remains one of Portugal’s most debated economic and social issues, particularly in urban centres where both rental and property prices have risen sharply in recent years.