Source: Adobe Stock Author: Redaction Public housing under PRR moves ahead of target PRR housing implementation is progressing consistently and points to the fulfilment of the defined targets, avoiding the return of European funds. The Government expects PRR housing to reach around 38,000 completed homes by August 2026, exceeding the initial objectives. According to the Executive, more than 20,000 homes have already been delivered under PRR housing, demonstrating a high pace of implementation and strengthening the programme’s response capacity in the housing sector. Government highlights execution and criticises planning The Minister for Infrastructure and Housing stresses that PRR housing is now better aligned with the country’s real needs, although he acknowledges shortcomings in the initial planning phase. The criticism focuses on the original PRR housing targets, considered not fully adapted to the sector’s reality. The Government argues that increased investment in PRR housing has allowed for a higher number of funded units, ensuring greater flexibility and reducing risks in meeting targets. Revisions strengthen PRR housing execution To ensure the success of PRR housing, the Executive has carried out revisions and reprogramming, redirecting funds to more advanced housing projects. This strategy has helped accelerate PRR housing implementation and reduce the risk of significant delays. The changes to the PRR housing programme aimed to prioritise more mature projects, ensuring that construction and delivery targets are met within the established deadlines. Housing target under PRR until 2026 The new PRR housing target points to around 31,000 homes under the 1st Right programme, reflecting an updated planning approach based on identified needs. The Government ensures that PRR housing execution is aligned with European Commission deadlines. With this approach, PRR housing remains one of the main tools to address the housing crisis, focusing on completing works and effectively delivering homes by the end of the programme.
Source: Adobe Stock Author: Redaction Bank of Portugal tightens mortgage lending rules The Bank of Portugal will tighten access to mortgage lending by reducing the current debt-to-income ratio of 50% by around 5 to 10 percentage points. The aim is to strengthen household financial stability in a context of high inflation and a possible interest rate increase by the ECB. The measure on mortgage lending has not yet been formalised, but it is being closely monitored by banks, which acknowledge the supervisor’s concern about mortgage lending risks, despite non-performing loan levels remaining low. Banks consider measure appropriate but warn of impact Banks do not officially comment on the change to mortgage lending, but sector sources consider the measure “appropriate”, given inflation trends and the international context. However, they admit a direct impact on mortgage lending granted. Some officials estimate that the reduction in the mortgage lending debt-to-income ratio could exclude part of the population from access to financing, especially outside major urban centres. There are also concerns about the impact on young people relying on mortgage lending with public support. According to sector estimates, between 10% and 15% of mortgage lending could no longer be granted under these new rules. Nevertheless, banks stress that mortgage lending continues to show low default levels. Debt-to-income ratio changes mortgage lending access The mortgage lending debt-to-income ratio measures the weight of monthly payments in household income. With the change, a household earning €2,000 could see the maximum mortgage repayment fall from €1,000 to €900, or even €800, depending on the new limit applied. This change in mortgage lending aims to anticipate risks for households and banks in a prolonged context of uncertainty, marked by market volatility and inflation trends. Mortgage lending remains the main financing product for households in Portugal, with a stock exceeding €113 billion, reinforcing the importance of risk management in this segment. ECB and inflation pressure mortgage lending Mortgage lending developments are also linked to European Central Bank decisions, which may raise interest rates again at the next meeting. Persistent inflation and geopolitical tensions continue to pressure mortgage lending in the Eurozone. In Portugal, mortgage lending continues to hold significant weight in the financial system, justifying the Bank of Portugal’s focus on tightening lending rules and reducing the debt-to-income ratio.
Source: Adobe Stock Author: Redaction Public employment reaches new historic high The number of State workers reached another record in the first quarter of 2026. According to data from the Directorate-General for Administration and Public Employment (DGAEP), public employment reached 767,094 workers at the end of March, reflecting a year-on-year growth of 1.1%. Compared to the end of 2025, public employment increased by 0.6%, corresponding to 4,816 additional jobs. Since the beginning of the statistical series in 2011, the State has accumulated growth of more than 39,000 workers. Central Administration continues to account for the majority of public employment in Portugal, followed by Local Administration. Regional Administrations and Social Security funds recorded reductions in the number of workers. Health, Education and Defence drive recruitment Growth in public employment was particularly strong in the areas of Health, Education and Defence. The senior technician career recorded the largest absolute increase, followed by the Armed Forces, teachers, nurses and doctors. In the Health sector, the reinforcement of workers occurred mainly in nursing careers, operational assistants, doctors and technical assistants. Education also increased staffing levels, with more teachers and support professionals. In National Defence, growth in public employment was linked to the reinforcement of military careers, especially among officers and enlisted personnel. In Local Administration, the increase resulted mainly from the hiring of senior technicians and operational assistants. Average State salary exceeds 2,280 euros In addition to the increase in public employment, average salaries in the State sector also recorded growth at the beginning of 2026. The average monthly base salary of full-time workers reached 1,912.3 euros, while the average monthly earnings rose to 2,281.2 euros. The salary increase results from the update of the guaranteed minimum monthly wage and the remuneration enhancement measures applied to public sector workers. The data also show salary differences between subsectors. In Central Administration, average monthly earnings exceed 2,477 euros, while in Local Administration they remain below 1,540 euros. Women represent the majority in public employment DGAEP also highlights that women continue to represent almost two-thirds of public employment in Portugal. The feminisation rate remains at 62.9%, above the national active population average. The most feminised sectors continue to be linked to Health and Social Security funds, where women represent the majority of workers. The report also shows that public employment continues to hold a significant weight in the national labour market, representing 13.6% of the active population and 14.5% of the employed population in Portugal.
Source: Adobe Stock Author: Redaction Euribor falls at three and 12 months The Euribor rate once again recorded different movements across maturities, with declines at three and 12 months and an increase at six months, reinforcing the volatility of Euribor rates in the interbank market. The three-month Euribor fell to 2.232%, remaining below the other Euribor rates. Meanwhile, the 12-month Euribor dropped to 2.815%, extending the downward adjustment trend in this longer maturity. These movements show that Euribor continues to be characterised by oscillations across maturities, with a direct impact on variable-rate mortgages indexed to Euribor. Six-month Euribor rises in mortgage lending At the six-month maturity, Euribor rose to 2.562%, once again becoming one of the most relevant Euribor indicators for mortgage lending in Portugal. Since January 2024, the six-month Euribor has been the most widely used benchmark in variable-rate mortgage contracts, meaning its evolution has a direct impact on thousands of households. The rise in the six-month Euribor contrasts with the decline in the other maturities, highlighting the differentiated nature of Euribor depending on maturity. Euribor and ECB monetary policy Euribor evolution is directly linked to decisions by the European Central Bank (ECB), which has kept key interest rates unchanged in recent monetary policy meetings. Euribor behaviour reflects market expectations regarding the future path of interest rates in the Eurozone, influencing Euribor-indexed mortgage lending. With the next ECB meeting scheduled for June, the market continues to closely monitor the Euribor trajectory, anticipating possible adjustments that could again affect Euribor across different maturities.
Source: Adobe Stock Author: Redaction IMT exemption boosts home buying The exemption from IMT and Stamp Duty on the purchase of a first home for young people up to 35 years old has already benefited around 100,000 young people, according to the Government. This IMT exemption measure has been highlighted as one of the main tools supporting access to housing, helping reduce upfront costs when buying a home. The impact of the IMT exemption is reflected in the real estate market, with average transactions around 200,000 euros. Many beneficiaries are middle-class young people, including doctors, engineers, workers and entrepreneurs, who were able to buy homes through this housing support. Government aims to complete Construir Portugal programme The Government intends to complete the implementation of the Construir Portugal programme by the end of the summer, reinforcing several housing-related measures. The goal is to consolidate housing policies, including legislation on real estate mediation, condominium management and housing cooperatives. The IMT exemption is part of a broader set of housing policies that the Government considers essential to increase supply and improve access to housing. According to the Housing Minister, the housing programme should be fully implemented in the coming months. Among the measures in preparation are also new rules for modular construction, which could scale up the sector and strengthen the response to growing housing demand. Housing fiscal package sparks debate The so-called housing fiscal package, which includes tax benefits such as reduced IRS for moderate rents and reduced VAT on housing construction, took around eight months to progress through the legislative process. The IMT exemption was one of the measures that advanced more quickly, contrasting with other housing policies that remained under discussion in Parliament for longer. The Government notes that some proposals were modified during the legislative process. Despite delays, the goal of housing policies remains focused on increasing housing supply and creating more affordable conditions for young people. The IMT exemption continues to be highlighted as one of the most effective measures in promoting access to housing in Portugal.
Source: Adobe Stock Author: Redaction Labour costs rise at the start of the year Companies’ labour costs increased by 4.9% in the first quarter of 2026, according to data from the National Statistics Institute (INE). This indicator reflects the evolution of wage costs and other employment-related costs, in a context of slowdown compared to the previous quarter. Wage costs recorded an increase of 5%, while other costs rose by 4.6%. Overall, there is a deceleration in labour costs compared to the end of 2025, when growth was more pronounced. Wage costs vary across economic sectors The evolution of labour costs shows significant differences between sectors. Construction recorded a 7.1% increase in wage costs, followed by industry at 6% and services at 4.2%. In public administration, the increase was 4.9%. Among the sectors analysed, only public administration does not follow the more pronounced slowdown observed in other segments. Nevertheless, all sectors recorded growth in wage costs, reflecting continued pressure on the labour market. Labour market flows show mobility INE data also indicate strong labour market mobility. Around 73,400 unemployed people found employment in the first quarter of 2026, representing 22.5% of the total unemployed at the end of 2025. Most unemployed people remained in the same situation, while some moved into inactivity. Among employed workers, most remained in the same status, although a small share moved into unemployment or inactivity. The study also shows relevant movements between contract types and working regimes, with a highlight on the increase in permanent contracts and the transition from part-time to full-time work. NEET youth and transitions into employment Among young people aged 16 to 34 classified as NEET at the end of 2025, 18.4% entered the labour market in the first quarter of 2026. Another 15% moved into education or training. These figures show some positive dynamics in youth integration into the labour market, despite a significant share still remaining outside employment, education or training.
Source: Adobe Stock Author: Redaction Government moves forward with new housing package The President of the Republic, António José Seguro, has promulgated the Government decree introducing new tax measures for housing. The legislation includes a reduction of construction VAT to 6% and a decrease in the autonomous income tax rate on rental income from 25% to 10% for landlords applying moderate rents. The housing tax package aims to increase housing supply on the market, both for sale and for rent. The measures apply to properties with so-called moderate prices, a concept created by the Government to define maximum limits for accessing tax benefits. In the case of home purchase, a property is considered moderately priced up to around €660,000. For rental, the moderate rent limit will be set at €2,300 per month in 2026. Construction VAT drops to 6% Among the main changes included in the housing tax package is the reduction of construction VAT to 6%. This applies to properties intended for rent at moderate levels or for sale within the limits defined by the Government. In addition, landlords charging up to €2,300 per month will benefit from a reduced 10% income tax rate on rental income. The aim is to encourage the increase of more affordable housing supply. The Government also foresees tax benefits for investors and companies linked to housing construction, including reduced taxation on dividends from investment funds dedicated to the real estate sector. Tenants to benefit from higher tax deductions The new housing tax package also includes measures aimed at tenants. The maximum rental tax deduction will increase from €700 to €900 in 2026 and is expected to reach €1,000 from 2027. Another approved measure includes capital gains tax exemption on property sales, provided the proceeds are reinvested in rental housing with moderate rents. The legislation also introduces changes to IMT for non-resident buyers. In these cases, a flat rate of 7.5% will apply, with no exemptions or reductions when properties are intended for housing. Measures awaiting official publication The promulgation of the decree marks one of the final steps before the new housing tax package enters into force. Publication in the Official Gazette is still required for the measures to take effect. The Government believes these tax changes could help stimulate construction, increase housing supply, and ease pressure on the Portuguese property market. In recent years, rising housing and rental prices have become one of the main economic and social challenges in Portugal , especially in major urban centres. The Government now expects these new tax incentives to improve access to housing.
Source: Adobe Stock Author: Redaction Spending on non-habitual residents soars Tax expenditure linked to non-habitual residents increased by 181% over five years, rising from 619.7 million euros in 2019 to 1.741 billion in 2024. The figures come from an audit by the Inspectorate-General of Finance (IGF), which warns of weaknesses in the control of the regime and the lack of a consolidated assessment of the economic and budgetary impact of these tax benefits. The non-habitual residents regime was created in 2009 to attract qualified professionals, foreign investors and pensioners through tax benefits lasting ten years, including reduced IRS rates and exemptions on some income obtained abroad. Number of non-habitual residents tripled According to the audit, the number of non-habitual residents more than tripled since 2019, rising from around 41,000 to more than 128,000 beneficiaries in 2024. Despite the end of the regime for new applicants under the 2024 State Budget, non-habitual residents already registered continue to benefit from the tax advantages, as do taxpayers included in the transitional regime created by the Government. The IGF acknowledges that non-habitual residents contributed to increased tax revenue for the State. Revenue associated with these taxpayers rose from 275 million euros in 2019 to more than 788 million in 2023. Even so, the inspection body argues that there is still no consolidated assessment comparing the fiscal cost of the regime with the actual return for public finances. IGF points to failures in tax control The audit identified several weaknesses in the control of non-habitual residents by the Tax Authority. Among the main problems are failures in verifying the previous tax residence of beneficiaries and difficulties in classifying activities considered to have high added value. The IGF also detected cases suggesting non-compliance with the rules of the regime, including taxpayers who may not have met the requirement of not being tax residents in Portugal during the five years prior to the application. Tax benefits remain until 2033 Although the non-habitual residents status has been revoked, taxpayers registered before January 2024 continue to benefit from the regime until completing the ten years provided for by law. In some cases, the tax benefits may remain until 2033. The IGF now recommends strengthening inspection mechanisms and tighter control over the effective tax residence of beneficiaries. The Tax Authority has already accepted the recommendations and says it is implementing part of the proposed measures to improve oversight of the non-habitual residents regime.
Source: Adobe Stock Author: Redaction Land without owners transferred to the State Land with no known owner in Portugal can now be registered in favour of the State, under a legal mechanism designed to combat the abandonment of rural properties. These ownerless lands are mainly rural plots forgotten over generations, often without updated registration. The issue of ownerless land is particularly relevant in the North and Centre of the country, where a large share of rural properties is estimated to be irregularly registered or without identified owners. These lands contribute to rural abandonment and increase the risk of fires. How the registration of ownerless land works The identification process of ownerless land begins with the Tax Authority, which flags properties without known owners through the cadastral system. When the owner cannot be identified, the land is published for 180 days for possible claims. If no one claims the land within that period, a provisional registration is made in favour of the State, which manages these lands for 15 years. Management is carried out by public entities responsible for forestry development and conservation. During this period, the land can still be claimed by rightful owners upon proof of ownership, and it is returned if ownership is confirmed. Registration and recovery of ownerless land The registration system for ownerless land is linked to the BUPi platform, which allows simplified identification and registration of rural properties. Many of these lands can be regularised free of charge through this system. If no claim is made within 15 years, the land becomes permanent property of the State. However, owners retain the right to recover the land within the legal period if they can prove ownership. The aim of this regime is to reduce rural abandonment, improve territorial planning, and lower the risks associated with wildfires in areas with highly fragmented land ownership.
Source: Adobe Stock Author: Redaction Project aims to strengthen employment in rural areas Portugal and Spain presented CrossRural Hub, a cross-border project financed with 3.2 million euros through European funds. The initiative aims to create employment in rural areas and combat population decline in low-density territories until 2028. The project was presented in Alegrete, in the municipality of Portalegre, and brings together public and private entities from both sides of the border. The main goal is to increase employment opportunities in rural areas through training, social innovation and technological development. Cooperation between Portugal and Spain focuses on innovation CrossRural Hub is co-financed by the European Union’s Interreg Poctep programme and aims to strengthen cooperation between Portugal and the Spanish region of Extremadura. The strategy includes pilot programmes linked to digital innovation, entrepreneurship and professional qualification. In addition to creating employment in rural areas, the project foresees the implementation of services and infrastructures capable of attracting new residents and retaining young talent inland. Cross-border cooperation is seen as essential to revitalise territories far from major urban centres. Training and technology to attract population The Director-General for Rural Development of the Regional Government of Extremadura, María Ángeles Murie, highlighted that the project represents an opportunity to revitalise rural areas and improve the quality of life of local populations. The investment in technology, specialised training and social innovation aims to make employment in rural areas more competitive and sustainable. The project will also pay special attention to young people and women, considered fundamental to ensuring the economic and social future of these territories. Local entities defend sustainable development During the presentation, the president of the Parish Council of Alegrete, António José Pombo, stressed the importance of development that respects rural identity and values local resources. Meanwhile, CCDR Alentejo highlighted the strategic impact of initiatives linking innovation, sustainability and territorial cohesion. CrossRural Hub involves 12 partner entities and aims to transform employment in rural areas into a priority for the economic development of the euro-regional area.
Source: Adobe Stock Author: Redaction IMF highlights criticism of Youth IRS The International Monetary Fund (IMF) recommends reversing the Youth IRS in Portugal, considering that this measure increases fiscal costs and creates distortions in the tax system. In the report concluding the post-programme surveillance mission, the IMF states that the Youth IRS does not show clear evidence of effectiveness in containing youth emigration, therefore supporting its reversal within Portugal’s fiscal policy framework. IMF calls for review of tax measures and housing The IMF also considers that some support measures for young people buying their first home, such as public guarantees and tax benefits, may increase demand and worsen imbalances in the housing market. The institution advocates simplifying Portugal’s tax system and reducing exemptions, noting that these reduce the tax base and increase compliance costs, particularly for small and medium-sized enterprises. The report adds that several VAT exemptions are not well targeted and may benefit higher-income households, supporting the elimination of some reduced rates. IMF proposes changes in the housing market In the housing sector, the IMF considers that reducing imbalances in the real estate market requires supply-side measures. Recommendations include facilitating the construction of new housing and encouraging long-term rental. The institution also suggests greater mobilisation of vacant properties and short-term rentals into the long-term rental market, as well as strengthening social housing and targeted support for low- and middle-income households. IMF addresses labour market and energy The IMF also recommends labour market reforms, highlighting the need for measures that increase productivity and reduce labour market duality, including greater flexibility in permanent contracts. On energy policy, the institution argues that any support measures should be temporary and targeted, avoiding broad tax reductions. The IMF stresses that energy prices should continue to reflect the market in order not to distort consumption signals.
Source: Adobe Stock Author: Redaction AI enters PRR document validation The structure responsible for implementing the Recovery and Resilience Plan (PRR) is testing artificial intelligence (AI) solutions to validate documents linked to the construction and rehabilitation of homes. The aim is to speed up the verification of the targets defined in the PRR, particularly in housing projects. The use of AI will be applied to the analysis of documentation related to the completion of works, helping reduce the time needed to confirm evidence and validate processes. Despite automation, the final analysis will always depend on human technical validation. The initial priority will focus on projects with the largest volume of documentation, especially operations linked to housing rehabilitation and construction supported by the PRR. PRR homes remain under pressure The focus of artificial intelligence will mainly be on processes linked to proving the delivery of homes financed by the PRR. Many of these projects require detailed analysis of reports, certificates and technical documentation. The initial target planned for more than ten thousand affordable homes financed by the PRR. However, difficulties in carrying out the works and delays caused by weather conditions forced a revision of the defined goals. According to the most recent data, only around half of the planned homes are expected to be fully completed within the originally established deadline. The remaining projects may move forward with only partial completion of the works. AI already speeds up application analysis Artificial intelligence had already been used in the analysis of applications linked to innovation and competitiveness programmes. The system makes it possible to automate risk assessment and support the scoring of submitted projects. With these models, processes that previously took more than an hour are now assessed in just a few minutes, increasing response speed and reducing the administrative burden. Digital tools are also being used to detect possible cases of double funding between different public and European support schemes, through the automatic cross-checking of data and documents. Technology expected to gain importance in the PRR The investment in artificial intelligence is expected to expand to other investments financed by the PRR, including projects with standardised documentation, such as energy certificates and technical reports. The goal is to increase efficiency in the management of European funds and speed up the validation of investments linked to housing, energy and urban rehabilitation. With thousands of projects still underway, the use of AI could become a central tool in monitoring PRR targets in the coming years.
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