Jorge Garcia, Real Estate specialist, analyses recent developments.
Source: Author
Author: Jorge Garcia, Real Estate Specialist
In Portugal, to be realistic, you need to believe in miracles!
The phrase attributed to David Ben-Gurion, one of the founders of the Jewish State, regarding Israel, seems to apply to Portugal.
Access to housing continues to worsen
Access to housing is now one of the main sources of social inequality and distributive conflict in Portugal.
The real estate sector appears to have improved its performance in the first half of 2026, confirming the year-on-year data released by the Statistics Portugal (INE) for the first quarter. Growth was driven by a 17.8% increase in prices, while transactions fell by 8.7%. Fewer families gained access to housing and, for the most part, those buying were families that already owned property.
In the second half of the year, pressure on prices and the contraction in sales are expected to continue. In 2026, the market is likely to remain active while housing affordability deteriorates further. Demand will continue to come from those with incomes compatible with rising prices, those able to access mortgage credit under stricter lending rules, or those who already own a property to sell.
For those looking to buy their first home, and for middle-income families whose earnings no longer match current market prices, the barrier to entry will become even higher.
The problem has never been knowing what to do
After decades in which public housing policies were absent or proved ineffective, policymakers have finally placed access to housing on the agenda.
Public housing remains negligible. Until now, the Portuguese State has left access to housing largely to bank lending and the market. While credit was easily available and affordable, and buyers were mainly domestic, the system worked. With the deterioration of Portuguese households' incomes and the arrival of foreign buyers with greater purchasing power, the market became unbalanced.
There has been no shortage of studies, analyses and endless debates about possible solutions. Due to political incapacity, but above all resistance to change from vested interests within the public administration, these problems have persisted and worsened.
Taking advantage of this "window of opportunity", it is crucial that the measures adopted are given the time, scale and implementation conditions needed to deliver results. In Portugal, the problem has never been knowing what to do. It has been doing it.
A recent study by Nuno Palma and Nobel Prize-winning economist James A. Robinson, Unlocking Portugal's Growth – Structural Reforms and Challenges in Implementing Economic Policies, highlights Portugal's real problem: the State's inability to implement.
A State that fails to meet deadlines, fails to decide and fails to act. An institutional model built on layers of legal risk control, where the rational decision is often not to decide.
Producing legislation, strategies, action plans and widely publicised reforms is simply not enough.
Portugal still clings to the idea of competitiveness based on production costs, resulting in an economy of low wages and low productivity. Today's global economic competitiveness is determined by the speed of decision-making. Licensing, regulation and taxation are more than State functions; they are competitive economic factors.
Implementation is the real challenge
Returning to the issue of access to housing, the supply of homes for younger generations and an increasingly impoverished middle class, the estimated housing shortage of 150,000 homes, and the missed opportunities under the Recovery and Resilience Plan (RRP), it is reasonable to believe that only industrialised and modular construction can significantly address the problem.
Technology also already makes it possible to establish binding deadlines for municipal licensing, full digitalisation and the public registration of planning decisions and their beneficiaries.
The Construction Code and the National Single Urban Planning Platform should already have been implemented, but they have not.
"Portugal is not facing a sudden crisis, but rather a slow structural decline. That is Portugal's problem," one that must be faced with realism, speed, courage and determination.
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