The biggest risk of Portuguese housing is not the fall in prices. It is that we continue without building.

The biggest risk of Portuguese housing is not the fall in prices. It is that we continue without building.

For years, we have been arguing about whether house prices in Portugal are rising too much, whether there is a real estate bubble, whether foreigners are buying too much, whether tourism has taken houses off the market, or whether credit has returned to pose a risk. These are legitimate and necessary debates. But perhaps we are, once again, too focused on the symptoms while we continue to avoid facing the real disease.
A new study by Morningstar DBRS puts numbers on what many professionals in the sector have felt for years: Portugal has accumulated, since 2014, a deficit of more than 300 thousand homes, when comparing the formation of new households with the number of completed houses. At the same time, prices have practically doubled since 2019 and increased by 19% in 2025 alone.
These figures should force us to ask a very simple question: how long can we continue to discuss rising prices without solving the lack of houses?
The study acknowledges that some of the factors that have strongly driven demand may lose steam in the coming years. Immigration may slow, financing conditions have become more demanding, interest rates have risen again, and deteriorating affordability is driving many households out of the market. All of this could moderate demand.
But there is a problem: the supply will continue to be unable to keep up with the country´s needs.
And this is where, in my opinion, the center of the whole Portuguese housing issue lies. We can change taxes, create public guarantees, limit certain activities, launch new purchase support or discuss who should and should not buy houses in Portugal. Some of these measures can have positive effects. Others may simply shift demand from one place to another. But none replaces the need to build.
Portugal has a lack of construction workers, high costs of materials and labor, scarcity of land prepared to receive new projects, and planning and licensing processes that remain too slow. DBRS itself identifies these structural limitations and considers it unlikely that the supply will be able to quickly recover the accumulated backlog.
Perhaps we should also make some self-criticism within the real estate sector itself. For too long we have celebrated price records as if they were always a demonstration of health. I myself, as a professional who has been following this market for many years, believe that we should be able to recognize that continuously rising prices are not necessarily positive when an increasing part of the population is no longer able to buy or rent a house.
A healthy market is not one where prices rise indefinitely. It is one where there is sufficient supply, residential mobility, investment, construction, functional lease and the ability for different levels of income to find appropriate solutions.
This does not mean, however, that we are facing a new bubble similar to the one that preceded the financial crisis. And here too the study is quite clear. Although there are signs that part of the recent appreciation of real estate is no longer fully explained by economic fundamentals, DBRS still considers it premature to talk about a real estate bubble in Portugal or Spain.
There is, in fact, a fundamental difference from the past: the current cycle has not been fueled by a huge accumulation of household debt. The ratio of household debt to disposable income has fallen from approximately 100% between 2008 and 2012 to around 50% in 2025.
Therefore, we should not create alarmism. But neither should we use the absence of a financial bubble as an excuse to ignore a deepening housing imbalance.
The Portuguese problem is not just in the number of houses we build. It is also in our ability to decide where to build, for whom to build and with what infrastructure. I have repeatedly argued that housing cannot be planned in isolation from the economy, transport, energy, water, schools and places where new jobs are being created.
It makes no sense to attract companies, technology centers, data centers, industrial units and thousands of new workers to a region without simultaneously planning where these people will live. Likewise, it makes no sense for each municipality to develop its housing strategy as if population and economic movements ended at its administrative borders.
We need regional planning, greater coordination between municipalities, technical capacity in municipalities and faster and more predictable decision-making processes. We need to transform land into land effectively available for construction, without giving up sustainability or urban quality. And we need to understand that accelerating does not necessarily mean making everything easier, but deciding better and in a timely manner.
We must also be careful when looking for single culprits. Foreign buyers have an impact on certain markets and segments. Tourism influences some areas. Immigration has increased demand. Low interest rates have facilitated financing for years. But none of these factors, alone, explains an accumulated shortage of more than 300 thousand homes.
The reality is simpler and, at the same time, more difficult to solve: for too long, Portugal has built less than it needed.
And even if demand slows down in the coming years, that doesn´t mean the problem will go away. A family that can´t afford to buy a house because of prices still needs housing. A young person who stays at home with his parents for lack of alternatives may not even immediately appear in the statistics as a new household. A worker who refuses a job in another city because he can´t find a place to live also represents an economic cost that we rarely measure.
The housing crisis is no longer just a social or real estate problem. It is a problem of national competitiveness.
Companies will find it difficult to attract workers to regions where they cannot live. Universities will lose talent if students cannot find housing. Cities can become less economically diverse when only the highest incomes can afford their housing costs.
Therefore, I continue to believe that Portugal needs to stop treating housing as a succession of emergency measures and start seeing it as an essential infrastructure for the country´s economic development.
We need public and private investment. We need developers, cooperatives, municipalities, institutional investors and different housing models. We need buying, renting, affordable housing and new solutions. There is no single answer capable of solving a deficit built over so many years.
But there is one certainty: without increasing supply, we will only continue to redistribute scarcity.
The DBRS study can predict a slowdown in some of the drivers of demand. But it also makes clear that supply constraints are likely to persist. And perhaps that is the most important message for Portugal.
We can argue for another decade about whether prices will go up or down. We can create new taxes, incentives, restrictions, and programs. We can continue to look for a different culprit for each political cycle.
Or we can finally face what the numbers show.
Portugal has a shortage of houses.
The real risk for the country is not that prices may one day fall. It is that we continue for another decade to discuss prices without building the missing houses.