Housing in Portugal: more construction, but still far from balance

In recent years we have seen a clear increase in new construction in Portugal. The numbers show this, the projects on the ground confirm it and the public discourse has been following this trend. At first glance, it might seem that we are finally moving towards a solution to the housing problem.
But when we look more closely, we realize that reality is more complex. Yes, there are more houses. But not necessarily more accessibility. And it is precisely in this contrast that lies one of the biggest challenges of the real estate sector in Portugal today.
Over time, I have followed this topic not only through data, but also through direct experience with investors, developers and buyers. And there is one point that becomes evident: the problem is not only one of supply. It is of structure.
Much of the new construction is concentrated in the areas with the greatest demand and the greatest financial capacity. Lisbon, Porto, Algarve and some specific urban hubs continue to absorb most of the new projects. This makes economic sense. It is where there is liquidity, where the risk is lower and where the return is more predictable.
But this logic creates a natural imbalance. The offer grows, but not necessarily in the segment that needs it most. Many families still do not find solutions compatible with their income, even in a context of greater construction activity.
To better understand this reality, it is important to look at the side of those who build.
Being a real estate developer in Portugal implies taking on a significant set of risks and costs from the first moment. Even before there is a work, there are already charges. Acquisition of land, studies, projects, fees, taxes and, above all, time.
Time is one of the most critical and least discussed factors. Dragging licensing processes, uncertainty in deadlines and regulatory changes create an environment where capital is tied up for long periods. And idle capital has a cost.
Added to this are the financial costs. Interest, especially in a context of higher rates, accrues throughout the project cycle. The longer it takes, the greater the impact. And this impact does not disappear. It is inevitably reflected in the final price.
There is also the tax burden, which continues to be relevant at various stages of the process. From acquisition to sale, including construction, tax costs accumulate and reduce the margin available to develop more affordable projects.
Faced with this scenario, the promoter's decision becomes almost inevitable. Develop projects where there is greater security of return. Medium-high or high segments, prime locations, markets with higher international demand.
It is not a lack of social sensitivity. It is about economic viability.
And this is where a fundamental point, often underestimated, comes in: the role of the State in creating the conditions for a more balanced market.
In Portugal, the direct intervention of the State in the promotion of housing has been limited, especially in the affordable rental segment. At the same time, fiscal and structural incentives to promote this type of projects are still insufficient to change market behavior.
If we think strategically, there are models that could be adapted to the Portuguese reality.
Just look at sectors such as retail or logistics. In these cases, real estate investment is often based on long-term contracts. An investor develops an asset based on yield predictability over 15 or 20 years. The focus is not on the tenant's operation, but on the stability of the real estate asset.
This model has created a solid, predictable and attractive market for institutional investors.
The question that arises is simple. Why not apply a logic similar to residential?
If there were mechanisms that guaranteed predictability to the investor, such as clear and stable tax benefits, associated with long-term lease contracts, we could see the development of a new housing segment in Portugal.
Developers to build not to sell, but to rent. With more stable yields, but also with lower risk. On the other hand, there could be clear commitments in terms of income values and access.
This type of model would have several advantages. It would create a structured rental supply, reduce pressure on housing purchases, and allow greater stability for households.
But for this to happen, it is essential that there is trust. Trust in rules, taxation and policy continuity.
Today, many projects are put on hold precisely because of the lack of predictability. Tax changes announced but not implemented, doubts in the application of measures and uncertain administrative processes create an environment where risk increases.
And when the risk increases, capital retracts or looks for safer alternatives.
Another important point is the territorial dimension of the problem. New construction remains very concentrated in large cities and coastal areas. The interior remains with little dynamics, despite the fact that, in many cases, it offers interesting conditions in terms of quality of life.
Here, again, the issue is about incentives. Without clear economic conditions, it is difficult for investment to move to areas with less immediate demand.
In the midst of all this, there are also positive signs. The increase in the number of licenses, the continued interest of investors and the sector's ability to adapt show that there is momentum and willingness to evolve.
Portugal continues to be an attractive country. For the quality of life, for safety, for the climate and for the growing international visibility. But this attractiveness has to be accompanied by a more balanced housing model.
The challenge is not just to build more. It is to align the interests of all stakeholders. Developers, investors, the State and, above all, people looking for a home.
Perhaps this is the right time to rethink the model. To leave the traditional logic of buying and selling as the main solution and start structuring a more professional, more stable and more affordable rental market.
If that happens, we will not just be responding to a current problem. We will be building a stronger foundation for the future.
Because in the end, housing is not just an asset or an investment. It is one of the fundamental foundations of a balanced society.
And ensuring this balance will probably be one of the biggest challenges and opportunities in the coming years in Portugal.