Portugal faces a housing crisis, but not a housing bubble

As an entrepreneur in the real estate sector, I cannot help but reflect on the moment that Portugal is going through in the housing market. Much is said about prices, speculation, and bubble risks, but there is something that is rarely underlined: most of the Portuguese housing stock continues to belong to the Portuguese themselves. It is this widespread property that has allowed many families to benefit from the appreciation of real estate, selling the old house to improve living conditions and ensure a more comfortable future for their children.
The truth is that Portugal has always been a country of owners and not tenants. Only Poland exceeds the percentage of households owning a home. And this did not happen by chance. For decades, renting has been penalized by wrong policies: inappropriate taxes, frozen rents, lack of legal certainty for landlords, and a slow and bureaucratic licensing process that has slowed down the supply of new housing. The result was inevitable: structural housing shortages and a continued rise in prices.
The National Institute of Statistics confirms what we all feel on the ground. In the second quarter of this year, the median house price exceeded 2000 euros per square meter, with an annual increase of 19%, the highest since the beginning of the statistical series. The European Commission calculates that the Portuguese market is overvalued by about 35%, the highest increase recorded in 2024 among all European Union countries.
But is this a sign of a housing bubble about to burst? Not everyone agrees. The Bank of Portugal, as well as several experts in the sector, stresses that the phenomenon results mainly from a lack of supply and not speculation. Between 2014 and 2024, nominal house prices grew by more than 200%, but the number of available properties did not keep up with this evolution.
The central problem is access to housing. Middle-income families are increasingly distant from the market, with the weight of house installments exceeding, in some cases, 40% of monthly income. Still, the data reveals that mortgage defaults have decreased to historically low levels, with only 0.2% of loans overdue in 2025.
The real risk is not collapse, but of exclusion. A country that does not guarantee affordable housing for its young people and skilled workers compromises its future. And here, the responsibility is collective: it passes through the State, the municipalities, the banks, and those who invest and build.
The causes are well identified. There is a lack of urban planning, there is a lack of incentives for rehabilitation, and there is a lack of coherent fiscal policy. VAT on construction remains an obstacle, and industry has not yet fully embraced the modernization and industrialization of processes, including modular and sustainable construction. On the other hand, many municipalities remain stuck with outdated regulations and licensing practices that take years to complete.
Portugal needs an integrated and long-term vision. The European Commission recommends policies that increase supply, promote social housing and reform land use. Today, only 1.1% of the Portuguese housing stock is public, half the value recorded in 2010. Without a significant increase in this number, the imbalance between demand and supply will continue to widen.
The new governor of the Bank of Portugal, Álvaro Santos Pereira, recently recalled that "more needs to be done". And he is right. It is necessary to build more, intelligently, and quickly, and free the sector from the shackles that make it slow and expensive. The role of local government is fundamental in this equation. Municipalities must be an active part of the solution and not of the problem.
Portugal is not facing a bubble, but a crisis of accessibility and vision. As a country, we must choose between continuing to treat housing as a matter of momentary emergency or making it a national priority. We have resources, talent, and experience in the industry. All that is missing is the courage to act in a coordinated and modern way.
Because the house is more than an economic asset. It is the center of life, the space where the future is built. And a country that does not guarantee homes for its citizens runs the risk of losing the very ground on which its development is based.