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Activity Funded

Impact of the COVID-19 pandemic on the Portuguese housing market

Impactos da COVID-19 no mercado de habitação português

Reference
2022.09401.PTDC
Project Start Date
2023-02-01
Project End Date
2024-12-31
Principal Investigator
Coinvestigator
Scientific Area
Social sciences
Funding Program
Concurso de Projetos de I&D em Todos os Domínios Científicos - 2022 - PEX

Abstract

The main objective of this exploratory project is to study the impact of the COVID-19 pandemic on the Portuguese housing market. For that, it is intended to make use of an exploratory scientific-methodological model, based on a quantitative approach. This quantitative model will estimate the 'Housing Access Index' for each Portuguese municipality (and for the parishes of the main municipalities), between the beginning of 2016 and the end of 2023. From the results obtained by this quantitative model, it will be possible to respond with scientific evidence to the following objectives: a) understand how access to housing evolved in Portugal between 2016 and 2023; b) quantify the real impact of the COVID-19 pandemic on access to housing; c) identify spatial patterns in access to housing in Portugal; d) predict new challenges facing the Portuguese housing market. SOCIO-SPACIAL ISSUES The Portuguese housing market has changed tremendously since 2010. These shifts have greatly affected access to housing and Portugal was one of the European Union countries where housing prices rose the most in the 2010s. The most visible transformation has been the rise in the square meter price, which has led to an increase in housing prices. This increase was evident across the entire country and affected more dramatically urban spaces, especially the Lisbon and Oporto metropolitan areas. Several factors can explain these changes: a) unstable housing policies over several decades; b) the rental market strong liberalisation; c) the urban tourism growth and the short-term rental; e) the investments from international real estate funds; f) the policies implemented to boost the buildings rehabilitation, particularly, the residential buildings conversion into hotels or renovation to luxury housing segments; and g) the adoption of public policies to attract foreign investment (e.g. tax policies and the Gold Visa program). The trends listed above have led to a massive transformation in the Portuguese housing market. For example, according to Statistics Portugal, in the Lisbon municipality the square meter average price rose from 1,875 euros at the beginning of 2016 to 3,333 euros at the beginning of 2020 (in some parishes, the square meter price has increased by more than 100%). The prices increase continued until the beginning of 2020. Recently, the COVID-19 pandemic shifted the dynamics of the Portuguese housing market. WHAT IS ITS RELEVANCE? There are several causes for concern in the current housing market. For example, in response to the COVID-19 pandemic, the Portuguese government has instated a moratorium on mortgages, which has suspended monthly obligations until September 31, 2021. According to ‘Banco de Portugal’ (supervisory entity) around 322,000 homebuyers requested this moratorium on mortgages between the start of the pandemic and mid-August 2020. In percentage, Portugal was the second country in the European Union with more requests for housing moratoriums, after Cyprus. For instance, looking at the absolute numbers, the Portuguese total was higher than the Spanish. These changes demonstrate how the COVID-19 pandemic affected households' capacity to pay their obligations. Two major socio-economic consequences could result from this scenario: (i) a sharp devaluation in the housing market, adjusting the prices to the new socio-economic reality; (ii) a generalised default on mortgages, with clear social, economic, and financial implications (particularly for households', banking entities and national economy). Besides, other problems, such as access to housing, the citizens’ well-being and social, economic, and spatial inequalities, need to be evaluated, monitored, and modelled, if possible. EXPLORATORY METHODOLOGICAL MODEL The access to housing evolution analysis will be supported by a quantitative and exploratory approach, making use of a scientific-methodological model, which will allow the estimation of the 'Housing Access Index' for all Portuguese municipalities (and the parishes of the main municipalities). This model is innovative because it allows measuring the access to housing evolution in Portugal, based on quantitative evidence, making use of various existing raw data. With these quantitative and exploratory results, it will be possible to identify the spatial patterns of the Portuguese real estate market over the last years and across territories where it is most difficult (or almost impossible) to access affordable housing for a national medium-class citizen. The results of this Project are intended to contribute to a better understanding of the Portuguese housing market and focus on the general impacts of COVID-19. Its findings and outcomes will be disseminated in scientific publications, on the Project website, on a webGIS online platform, and will be also shared with the policymakers, the academic community, and the civil society.

Institutions

Main Institutions

  • Universidade Nova de Lisboa (UNL)

Funding 49.984,36 €

Fundação para a Ciência e a Tecnologia (FCT) - Portugal

49.984,36 €