Paulo Cunha, European Member of Parliament – Housing: From Challenge to Solution in Portugal and in Europe

The housing crisis in Portugal is a reflection of an unbalanced real estate market, with a shortage of supply pushing up prices and making housing unaffordable for young people and middle-income families. In Lisbon and Oporto, prices rose by 16.3% in the first quarter of 2025, with the average cost per square metre surpassing 2500 Euros. The shortage is a result of bureaucracy, sluggish construction – only 25,000 homes in 2024 – and speculation by foreign investors and tourism. Gentrification and the lack of public housing are compounding the issue, whereby there are approximately 17 families for every property available to rent.
I am confident, however, that this crisis can be solved. The government, with its €1.3 billion package, is implementing a ‘supply shock’ approach. The package includes a European Investment Bank line of credit for 133,000 affordable units by 2029, optimisation of public assets for social housing and the ‘Property Identity Card’ to reduce bureaucracy. The Recovery and Resilience Plan delivered 10,000 public houses in 2025, while a further 8,000 are expected by December. These measures, together with bolstering the Institute for Housing and Urban Rehabilitation, are helping speed up construction and thus alleviate the shortage.
The government has also implemented fiscal measures to increase purchasing power: reductions in municipal property tax (IMI) and property transfer tax (IMT) for renovated or rented properties, lower income tax for family savings, and public guarantees for young people up to the age of 35 to obtain mortgage loans. These initiatives are promoting an inclusive market.
In Europe, President Ursula von der Leyen, in her State of the Union address, highlighted housing as a ‘social crisis’. She announced an Affordable Housing Plan, with a review of state subsidy rules and investment in renovation. We need a balanced real estate market with a strong social component. With political will and the correct use of European funds, Portugal will be able to reverse this trend, ensuring that everyone has a decent home.