Source: Adobe Stock Author: Redaction Anyone who rents out a home before selling it loses IRS capital gains exemption Anyone who places their main private residence on the rental market before selling it may lose the exemption from IRS on capital gains. The Tax Authority clarifies that maintaining the tax address does not, on its own, guarantee access to the exemption from IRS on capital gains. The decisive factor is the effective use of the property as a main private residence in the 12 months prior to the sale. Legal conditions for IRS capital gains exemption The exemption from IRS on capital gains depends on cumulative requirements set out in the Personal Income Tax Code. To benefit from the exemption from IRS on capital gains, the proceeds from the sale must be reinvested in the purchase of another main private residence, land for construction or renovation works. In addition, the intention to reinvest must be declared in the IRS return. The reinvestment period for the exemption from IRS on capital gains runs between the 24 months before and the 36 months after the sale. Main private residence and loss of benefit The Tax Authority defines a main private residence as the place where family life is stably centred. When the property is rented out, it no longer meets this requirement, potentially jeopardising the exemption from IRS on capital gains. Even if the tax domicile remains unchanged, this is not sufficient to guarantee the exemption, as the effective use of the property is decisive. Tax risk when renting before selling Renting out the home before selling it may change its tax classification and lead to the loss of the exemption from IRS on capital gains. The Tax Authority’s interpretation reinforces that the exemption from IRS on capital gains depends on the actual use of the property as a main private residence. Therefore, any decision to rent it out beforehand should be carefully assessed, as it may result in the loss of the associated tax benefit.
Source: Adobe Stock Author: Redaction DBRS and market outlook The DBRS (Dominion Bond Rating Service) anticipates a gradual slowdown in housing prices in Portugal in the coming years, if reduced immigration, high inflation and tighter credit conditions persist. However, market dynamics suggest that housing prices in Portugal will remain under pressure due to supply shortages. Supply and demand in real estate The agency highlights that housing prices in Portugal are mainly driven by the imbalance between supply and demand. Insufficient construction and high costs limit the market’s response. Thus, housing prices in Portugal tend to remain high, even with some slowdown in demand. In Portugal, the housing shortage worsens the evolution of housing prices in Portugal. The DBRS rules out a housing bubble scenario, stressing that growth has not been supported by excessive household debt. The debt-to-disposable income ratio has fallen significantly since the last financial crisis, strengthening sector stability and reducing systemic risk in the housing market. Structural factors and outlook Limited available land, labour shortages in construction and slow licensing procedures continue to constrain the real estate market. Tourism and international demand also influence the supply-demand balance, prolonging tensions in the sector and making a rapid price correction more difficult.
Source: Adobe Stock Author: Redaction Bank valuation of the square metre on the rise The value of the square metre in housing bank valuations reached a new high in May, reflecting a strong acceleration in the value of the square metre in Portugal. According to INE, the value of the square metre stood at €2,208, representing a year-on-year increase of 17.1%. This rise confirms the upward trend in the value of the square metre in Portugal in mortgage lending, with new historical highs. Apartments drive square metre value higher In apartments, the value of the square metre in Portugal rose to €2,580, with significant growth compared to the previous year. Greater Lisbon and the Algarve continue to record the highest square metre values, while other regions show lower levels. The evolution of the value of the square metre in Portugal was widespread across all regions, with no negative exceptions. More in-demand property types also recorded increases in the value of the square metre in Portugal. Houses and regional disparities In houses, the value of the square metre in Portugal reached €1,581, with a steady year-on-year increase. Greater Lisbon and the Algarve once again lead the value of the square metre in Portugal, while the Centre and Alentejo maintain the lowest levels. Regional variations confirm growing pressure on the value of the square metre in Portugal, with significant differences across the country. Bank valuations and market trend The number of bank valuations rose slightly, reflecting greater dynamism in mortgage lending. The increase in the value of the square metre in Portugal reinforces the upward trend in the real estate market, driven by demand and limited supply. The sustained rise in the value of the square metre in Portugal confirms the continuation of the growth cycle in the housing sector.
Source: Adobe Stock Author: Redaction Record surplus in Social Security Social Security closed the first four months of the year with a €2.885 billion surplus, the highest level recorded in the first four-month period of the past decade. This performance reinforces the role of Social Security as one of the main pillars of balance in public finances, in a context where the overall state balance has worsened. The result represents growth compared to the same period last year and reflects the strong dynamics of the Social Security contributory system, which continues to benefit from positive labour market developments. Revenue and expenditure of the contributory system Social Security’s performance is mainly driven by the increase in contributory revenue, which grew by around 8% in the first four months of the year. This increase was driven by a higher number of workers contributing and rising average wages, as well as a decline in registered unemployment. On the expenditure side, Social Security recorded a more moderate increase, below the level forecast in the State Budget. Old-age pensions, the main component of Social Security expenditure, even recorded a slight year-on-year decline, explained by base effects linked to extraordinary adjustments in the previous year. Impact on public accounts and outlook The Social Security surplus had a decisive impact in mitigating the public administration deficit, helping to offset the deterioration in the state balance. Without this contribution from Social Security, the overall deficit would be significantly higher. Despite the positive performance, future prospects depend on economic growth, employment trends and the ability to sustain contribution growth. Population ageing and pressure on social spending continue to represent structural challenges for the medium-term sustainability of Social Security.
Source: Author Author: Jorge Garcia, Real Estate Specialist Portugal at three speeds The real estate market in Portugal continues at three speeds. The speed promised by national and local decision-makers, the more or less rapid speed at which operators move according to their capabilities and skills, and the slow speed of the Public Administration. Recently, the government approved a set of necessary measures, with the intention of addressing the serious housing access crisis. Gap between decision and execution At different speeds, operators in the real estate ecosystem have been trying to adapt to internal and external constraints that affect their activity, while the responsible authorities, namely those in charge of licensing, remain in a lethargic state. In public entities, nothing has changed; technicians continue to “pass upwards”, and obstacles remain. Faced with new challenges and constraints, when it is necessary to respond to the shortage of housing supply, the Public Administration continues to fail as if the time and money of real estate developers and taxpayers were free. Invisible costs of administrative time Over the long period that elapses until the licensing of a new housing development, real estate developers incur financial costs, access to affordable housing is denied to future residents, those who can are paying higher rents in other locations, and municipalities are losing tax revenues from IMI, IRS, among others. These are easily quantifiable costs that are not assigned to anyone. The cost of decision time is a significant economic cost which, together with others, has led to “the numbers not adding up” in many affordable housing projects. Compliance with outdated construction regulations also continues to generate additional costs, with bureaucracy acting as a “protective shield” for technical and political responsibilities. Bureaucracy, blockages and structural challenges Stagnation has a high cost, but change brings a lot of work and headaches when it interferes with the multiple corporate interests embedded in the numerous state bodies. In recent events we have attended, operators’ complaints remain unchanged. When discussing building or renovating for affordable housing, implementing energy transition and building decarbonisation programmes, modernising construction, digitalisation and technological innovation, the WFD - Water Framework Directive, and the transformation of urban spaces, we are faced with major challenges. We have an ageing housing stock with around 70% of buildings being energy inefficient, ageing urban and building water networks, degraded and in some cases containing contaminating materials, a lack of skilled labour and funding sources, regulatory complexity, and slow licensing processes. Industrialisation of construction and productivity But the issue that is most concerning in the short term, given the need to increase productivity and decarbonise, the shortage of labour, and the need to reduce delivery times for housing units, is the industrialisation of the construction process at scale. According to recent statements by Miguel Garcia at the “Real Estate Shapers” event organised by “Magazine Imobiliário”, a building with 77 units could be delivered in less than a year. Would the “heavy state machine” be up to it? Last but not least! On 9 June, ADIT – Brazilian Association for Real Estate and Tourism Development celebrates its 20th anniversary. It will take place in Maceió, State of Alagoas, where it all began. I had the privilege of being a speaker at the first edition of this event related to tourism and real estate investment in Brazil. When it was founded, the organisers sought inspiration abroad. Two decades later, it is in Brazil that it can be found, in the best that is done on a global scale. Thank you Felipe Cavalcanti for your entrepreneurship and for continuing to be a source of inspiration.
Source: Adobe Stock Author: Redaction What is Porta 65 Youth Porta 65 Youth is a public rental housing support programme aimed at young people aged between 18 and 35. In couples, it is possible to apply provided one member is up to 37 years old and the other does not exceed 35 years old, in compliance with Porta 65 Youth rules. This Porta 65 Youth support consists of a monthly rent contribution, calculated based on the contractual rent, household income and rent burden rate. The Porta 65 Youth programme is managed by IHRU – Institute for Housing and Urban Rehabilitation. Applications for Porta 65 Youth are submitted online via the Housing Portal and can be made with or without an existing rental contract, although in the latter case it must be submitted later within the deadline defined in the Porta 65 Youth regulations. How Porta 65 Youth works Porta 65 Youth grants a monthly financial support for 12 months, corresponding to a percentage of eligible rent. The support can be renewed annually, up to a maximum of five years, consecutive or non-consecutive, under Porta 65 Youth rules. To access Porta 65 Youth, the following requirements must be met: Age within the limits defined by Porta 65 Youth Rental contract or promissory contract Permanent residence in the property Rent burden within the established limits Household income within legal limits No ownership of another residential property No outstanding debt from previous Porta 65 Youth or housing support programmes The rental contract under Porta 65 Youth must have a minimum duration of 12 months or be renewable. The property must also be suitable for the household size according to typology limits defined in Porta 65 Youth regulations. The support calculation is based on the lower value between actual rent and the maximum reference rent for the area, applying a percentage defined by scoring brackets assigned in the Porta 65 Youth application. Porta 65 Youth application Applications for Porta 65 Youth are made exclusively online via the Housing Portal. The process requires authentication with tax number and Tax Authority password, Mobile Digital Key or Citizen Card. To submit a Porta 65 Youth application, the following data are required: Tax number (NIF) and Social Security number (NISS) of all household members IBAN/NIB for payment of the support Rental contract or promissory contract Income tax declaration or proof of income Identification of applicants Porta 65 Youth allows applications without a contract, but the document must be submitted later within the legal deadline after approval or submission, as provided in the rules. After submission, Porta 65 Youth is assessed within approximately 45 days. Results are published on the Housing Portal and beneficiaries receive the support via bank transfer. Additional rules and framework for Porta 65 Youth Porta 65 Youth also defines rent limits by geographic area and housing typology criteria, adjusted to household size. The support may include increases in specific situations, such as housing in historic areas, single-parent families or households with dependents or disabled members. The final value depends on the score obtained, combining income, financial effort and housing conditions. The system is periodically reviewed and subject to current IHRU regulations.
Source: Adobe Stock Author: Redaction New model strengthens higher education grants The Government will strengthen the higher education grant system, with a 53% increase in social support funding. With this new grant model, the average annual amount is expected to rise to around €2,660, reflecting a major update in the calculation of grants. The aim is to make grants better aligned with the real cost of studying, ensuring greater coverage of students’ expenses. Grants will therefore be recalculated based on more detailed criteria, including the cost of living per municipality. How new grants will be calculated The new grant model considers the average cost of studying in higher education, including tuition fees, food, transport and accommodation. The difference between this cost and household financial capacity determines the grant amount. With this system, grants become more progressive and better adapted to each student’s reality. The Government estimates that the average grant value will rise from €1,734 to €2,660 per year, a significant increase in support through grants. The minimum grant remains at €872, while the maximum grant will be awarded to students in the most vulnerable situations, reinforcing the role of grants as an equity tool. Impact of grants and transitional regime The new grant system will come into force in the 2026/2027 academic year, with a transitional regime ensuring that no student loses support. Existing grants will remain in place until the end of the course whenever they are more favourable. The reinforcement of grants represents a significant investment in social support, directly impacting around 83,000 students. In some cases, grants may reach more than €7,000 per year, especially for students who are away from home. Grants will also continue to include housing support, with priority access to public residences and additional compensation when no place is available. The new model therefore strengthens the role of grants in reducing inequalities in access to higher education.
Source: Adobe Stock Author: Redaction Public housing and rents in Lisbon More than 60% of municipal rents in Lisbon are below 100 euros, across a universe of more than 21,000 housing contracts. According to Gebalis data, 63% of municipal rents are below 100 euros and around 30% do not exceed 25 euros, highlighting the weight of public housing in the city. The Housing and Urbanism councillor, Vasco Moreira Rato, stressed that these figures demonstrate the importance of public housing, arguing that the structure of municipal rents reflects the financial capacity of the families living in municipal housing. Public housing in Lisbon represents around 10% of the resident population. Public supply and the role of private developers in housing The municipal official highlighted that public housing plays an essential role in responding to the housing crisis, but rejected the idea that it is the only solution. The council’s strategy is to combine public housing, affordable housing and private development, strengthening the overall housing supply in Lisbon. The councillor also noted that the municipality has been working with private developers, mainly through licensing processes and projects with affordable housing components. In a case involving a development in Olivais, the possibility of the developer transferring affordable housing to the municipality was mentioned as an alternative to other facilities. Affordable rent and new housing models Municipal housing continues to be complemented by programmes such as affordable rent, which aim to respond to different income profiles. The municipality considers that not all housing needs can be solved through public housing alone, requiring a combination of solutions. Vasco Moreira Rato argued that the housing crisis does not have a single solution, highlighting that the economic and social context is constantly changing. In this sense, the Lisbon municipality is seeking partnerships with private entities to increase housing supply, recognising that the council does not have all the necessary resources on its own. He also stressed that “everyone will be needed” to address the housing challenge in Lisbon, defending cooperation between the public and private sectors as essential to respond to growing demand.
Source: Author Author: Jorge Garcia, Real Estate Specialist The housing access crisis, the sluggish state and real estate Darwinism There we were once again at another edition of SIL – Portugal Real Estate Fair, where the “star” theme was “built to rent”. In an environment identified by the property developers and estate agents present as one of “more considered decision-making by those buying and investing”. “Built to rent” brings new challenges to property development, being a segment that attracts long-term non-speculative real estate investment, institutional operators such as REITs, sovereign wealth funds, insurance companies and pension funds. A model that changes the objective of the property business: from immediate income through selling properties at the highest possible price, to optimising income over decades. With purchase prices continuing at unaffordable levels for the majority of the population, a “Seller’s Market” with a structural supply deficit and robust demand, renting emerges as an option for affordable housing needs. The slowing property market Until now, in the sales market, well-located properties with market values adjusted to their target audience have seen rapid absorption. In a slightly slowing market, absorption time will tend to increase. Still far from a “Buyer’s Market” situation, for similar properties misaligned with their target and overvalued, buyers will pressure negotiations and owners will either reduce prices or fail to sell. News coming from Italy already reflects a trend towards falling prices. In Portugal, the property market is beginning to show signs of change, particularly in the second-hand segment, given the speculative mentality of most small property owners. Inflation, interest rates and housing credit The suspension of global logistics and energy chains, if it becomes a prolonged disruption, will lead central banks to tighten monetary policy. Alongside greater pressure on construction and refurbishment costs, there may be a significant rise in Euribor rates, worsening the costs of access to housing credit. So far, the European Central Bank has demonstrated assertive prudence regarding the lasting nature of inflationary tensions and in the face of nervousness in the financial markets. Inflation and rising interest rates in a context of low economic growth do not bode well. But while the unemployment rate remains at low levels, demand should remain dynamic, despite the pressure on buyers’ “effort rates”. Interest should persist, but decision times are expected to increase and reveal greater fluctuation between the “asking price” and the actual sale value. Portugal and international buyers Portugal as a destination still has enormous growth potential in attracting foreign buyers in the premium, luxury and ultra-luxury segments, if there is capacity to produce products aimed at these segments on a global scale. There is still much to be done in the field of construction and refurbishment of properties for buyers in these demanding market niches. There are international investors looking for alternatives to Middle Eastern markets. Real estate Darwinism Still widely discussed here are the concentrations of operations that took place in the North American market: Anywhere (C21, ERA, Sotheby’s, Coldwell Banker, Corcoran) and Compass, RE/MAX and Real, EXP and NextHome, Zillow and realtor.com, Rocket and Redfin. In a short space of time, two of the most digital real estate companies in the USA bought the sector’s “giants”, a fully virtual brokerage bought a network of estate agencies, the property portals Zillow and realtor.com joined forces, and the largest mortgage platform Rocket bought the property portal Redfin. It is the principle of real estate Darwinism, the survival of the fittest, where the fittest are those who adapt best. In Portugal, for now, nothing changes. But the “evolutionary environment” is changing and, when it changes, many operators cease to be adapted and do not survive. The sluggish state As for the public bodies on which the property sector depends, “everything remains the same as the sluggish snail”.
Source: Adobe Stock Author: Redaction Investment in residences continues to grow Investment in student residences in Portugal reached around 1.2 billion euros between 2019 and 2025. A large part of this amount resulted from the sale of real estate assets linked to student accommodation, alongside new construction projects. In recent years, the student residence market has attracted the interest of international investors and operators specialised in academic accommodation. The growth in demand for rooms and beds for students has reinforced the attractiveness of this real estate segment. Despite strong investment in residences, supply remains limited when compared to the total number of students in the country. Currently, there are around 26,000 beds available, covering only a small part of national demand. Bed supply remains below demand Student residences continue to struggle to respond to rising demand, driven by both Portuguese and international students. Pressure on the traditional rental market has also led more students to seek this type of accommodation. Porto currently concentrates the largest number of private student residence beds, followed by Lisbon. Even so, the coverage rate remains well below that seen in several European countries, where student accommodation supply is more extensive. In the coming years, new private residences are planned in cities such as Lisbon and Porto, increasing the number of available beds. Even so, the expected growth will have a limited impact on overall student demand coverage. Residence prices vary between cities Student residence prices vary significantly between Portuguese cities. In some markets, rental values remain high, especially in premium options and in areas with higher demand. Lisbon and Porto maintain some of the highest prices in the student accommodation segment, reflecting strong demand and limited supply. Cities such as Braga also show high values in standard residences. Investment in residences is expected to continue growing in the coming years, in line with the increase in student numbers and demand for more organised accommodation solutions closer to universities.
Source: Adobe Stock Author: Redaction Growth of European residential investment Investment in residential real estate continues to strengthen as one of the main asset classes in the property sector. In 2025, the segment reached around 59,000 million euros, the highest value since 2023, confirming the growing interest in residential investment from institutional investors. According to data from Cushman & Wakefield, residential investment is gaining weight in European portfolios, with two-thirds of investors already allocating more than 20% of their assets to this sector. In addition, 96% of respondents expect to increase exposure to residential investment by 2031, reinforcing a structural growth trend. PRS and BTR lead investment strategies In the current residential investment context, return stability remains the main attractiveness factor, highlighted by 74% of investors. This performance is supported by favourable demographic dynamics and consistent demand across different market segments. The most sought-after residential investment strategies continue to be PRS (Private Rental Sector) and BTR (Build-to-Rent), followed by student accommodation (PBSA). At the same time, new forms of residential investment are emerging, such as affordable housing and co-living, which are gaining relevance in institutional portfolios. Outlook for residential investment Outlook for residential investment indicates continued growth, with investors expecting stability in interest rates and prime housing yields. In this scenario, sector performance will depend mainly on rental growth and operational efficiency of assets. In 2026, PRS and BTR are expected to be the best-performing segments within residential investment, followed by PBSA. However, challenges remain such as limited opportunities, price misalignment and regulatory factors. In Portugal, institutional residential investment remains limited, with student accommodation standing out due to strong demand and constrained supply. Growth in residential investment in the country may accelerate with new tax frameworks and increased international capital interest.
Source: Adobe Stock Author: Redaction Euribor rate falls to three, six and 12 months The Euribor fell this Thursday across the three main maturities, reinforcing the adjustment trend in interbank markets. The three-month Euribor fell to 2.238%, remaining below the six- and 12-month rates. The six-month rate stood at 2.453% and the 12-month rate at 2.723%. The evolution of the Euribor confirms a slight decline compared with the previous session, with a stronger impact in the short term. In the case of the three-month rate, the Euribor fell by 0.002 points, while the six-month rate lost 0.015 points and the 12-month rate fell by 0.033 points. These movements reflect the most recent behaviour of the European money market. Euribor six-month rate maintains leadership in mortgage lending The six-month Euribor continues to be the most used rate in Portugal in variable-rate home loans, representing around 39.18% of the stock of loans. Despite the recent decline, the Euribor remains the dominant benchmark in this segment. According to recent data from Banco de Portugal, the 12-month Euribor represents 31.73% of loans, while the three-month rate accounts for 24.79%. This distribution shows the ongoing relevance of the Euribor in mortgage contracts in Portugal, especially in the intermediate maturity. The evolution of the six-month Euribor is particularly relevant for many households, as it directly influences monthly payments in most variable-rate contracts. ECB and outlook for Euribor developments The Euribor’s trajectory is directly linked to the decisions of the European Central Bank. At the latest monetary policy meeting, the ECB kept interest rates unchanged for the sixth consecutive time, following a cycle of cuts that began earlier. This stability contributes to the recent moderation of the Euribor, although markets remain attentive to upcoming decisions. The next ECB meeting could be decisive for the future evolution of the Euribor, especially at longer maturities. The monthly average of the Euribor in March recorded increases across all three maturities, although more pronounced in the six- and 12-month tenors. This behaviour reinforces the controlled volatility of the Euribor in a context of adjustment in European monetary policy. Euribor rates continue to be calculated based on the average rates at which 19 eurozone banks are willing to lend to each other in the interbank market, reflecting daily liquidity conditions and economic expectations.
Source: Author Author: Jorge Garcia, Real Estate Specialist New conflicts and the real estate market; barometers and thermometers in Portugal In the face of a new conflict in the Middle East, it will be important to pay attention to the figurative gauges of pressure and temperature in the real estate market in Portugal. Twenty-six days had passed since the beginning of yet another armed conflict with global implications. At the National Real Estate Awards – the “Oscars of Real Estate”, an initiative by “Magazine Imobiliário”, the sector celebrated another year of dynamism. An edition that recorded a record number of 92 entries and 50 finalists. For more than 10 years I have had the privilege of being present at this event. It is at the cocktail and awards dinner that we seek to scrutinise the market from the supply side; it is in the informality of opinions that we try to perceive the confidence of operators. In the residential segment, the main award was given to the “Condes de Caria” development, a rehabilitation of residential heritage of historical value adapted to contemporary housing, on Estrada das Laranjeiras, in Lisbon. Also distinguished at a regional scale were “Greenstone”, in Foz do Douro, Porto, “Villa Sanches”, in Campo de Ourique, Lisbon, and “Natura Village”, in Vilamoura. Developments focused on the “premium” segment, a refuge for real estate development in a scenario of excessive bureaucracy, high construction costs, difficulties in obtaining licensing and shortage of labour. The big winner of the night was MACAM – Museu de Arte Contemporânea Armando Martins, a cultural facility that integrates a contemporary art museum and a hotel unit in a historic and cultural area of Lisbon, between Alcântara and Belém. It will be in a complex international context that SIL - Salão Imobiliário de Portugal will take place. With 20% more exhibitors compared to the previous edition and increased expectations regarding the presence of representations from the Middle East. In recent years we have also been there: in 2020, when operators challenged the uncertainties caused by the COVID-19 pandemic; in 2022, when the Russian invasion of Ukrainian territory caused significant inflationary tensions; and in 2023, when high interest rates sought to control inflation. On all these occasions, the market reacted, reinvented itself and recovered. This time will be no different. Public policies and structural challenges In 2026, when decision-makers are alert to the results of the diagnoses, a new uncontrollable external setback now arises. With the approval of the State Budget and the “Housing Law 2026”, which regulated fiscal reforms, housing has become a structuring political priority. The package of measures announced responded to some of the recognised vulnerabilities. But solutions to the crisis of access to affordable housing are neither easy nor quick. The Electronic Platform for Urban Planning Procedures and the Electronic System for the Issuance of Opinions are important steps in the digitalisation of municipalities and the simplification of decision-making processes. The creation of the CIA figure - Investment Contracts for Letting is an important instrument. Guiding the speed of decision-making and creating new investment instruments in affordable housing are relevant measures. But if the legislation governing urban planning licensing remains unclear, if rules, procedures and interpretations persist across the 308 municipalities and external entities, the web will continue to feed the “bureaucratic monster”. Between 2024 and 2025, 114,500 licensing applications were submitted, with only 64% of these projects proceeding to construction. PRR funding for the construction of affordable housing will have mediocre execution. Support for reconstruction after the storms that hit our territory is significantly delayed. The continued reliance on IHRU as a public partner in housing policies, particularly in the CIA, does not bode well. If fiscal and technological shocks are important, confidence in investment and a cultural shift in public administration are essential.
Source: Adobe Stock Author: Redaction Household saving rate declines in the Euro Area The household saving rate in the Euro Area fell to 14.4% in the fourth quarter of 2025, below the 14.8% recorded both in the previous quarter and in the same period last year. This reduction in the household saving rate indicates a greater tendency towards consumption over saving. According to Eurostat, this evolution in the household saving rate results from growth in private consumption exceeding the increase in gross disposable income. Consumption rose by 1.2%, while disposable income increased by 0.8%, putting downward pressure on the household saving rate in the Euro Area. Household investment rises slightly Despite the decline in the household saving rate, the household investment rate increased slightly, rising from 8.5% to 8.8%. This increase reflects higher gross fixed capital formation, which grew at a faster rate than disposable income. The evolution suggests a shift in household financial behaviour, with less saving and a greater focus on consumption and investment. Nevertheless, the household saving rate remains at historically high levels in the Euro Area. Companies maintain investment stability In the corporate sector, the profit share of non-financial corporations remained stable at 39.5%, with no significant changes over the period analysed. The corporate investment rate, however, fell slightly from 21.6% to 21.4%. This development shows greater caution in corporate investment, in a context where the household saving rate is also changing significantly. According to Eurostat, the combined behaviour of households and companies reflects a stronger orientation towards consumption and a more cautious approach to investment.
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