IMF recommends ending youth housing support in Portugal, warning of increased demand and imbalances in the housing market.
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Author: Redaction
IMF criticises measures for youth housing
The International Monetary Fund (IMF) recommends that the Portuguese Government review youth housing support, arguing that these measures end up increasing demand and worsening imbalances in the housing market. The position is set out in the Article IV report on Portugal, released this week.
Among the
youth housing support measures in question are the public guarantee and exemption from IMT and Stamp Duty for people up to 35 years old buying their first home. According to the IMF, these youth housing measures aim to improve affordability but end up putting further pressure on the market.
Impact of support on the housing market
According to the IMF, youth housing support has contributed to rising demand, making it harder to address structural problems in the housing market. The institution argues that the focus should shift from demand to housing supply.
The report highlights that imbalances in the housing market require more structural measures capable of increasing the number of available homes and stabilising housing prices. The IMF also warns about the impact of these supports on fiscal expenditure, which tends to increase with this type of incentive.
IMF calls for increased housing supply
The IMF considers that the solution to housing problems in Portugal lies mainly in boosting housing supply. Suggested measures include simplifying licensing processes, changes in zoning, and greater flexibility in land use.
These housing sector reforms are seen as essential to sustainably improve housing affordability. The goal is to reduce constraints that limit new home construction and rebalance the housing market in the long term.
Social support and market rebalancing
Despite its criticism of youth housing support, the IMF argues that targeted support should be provided to the most vulnerable households. This support should come through social housing and specific subsidies, rather than broad incentives. The institution also stresses the importance of rebalancing taxation in the housing sector and improving the functioning of the rental market. The aim is to ensure a more efficient housing market, with greater supply and better access conditions.
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