Housing affordability is rapidly deteriorating across Europe, but Portugal has stood out as the country with the most overpriced property prices in the European Union, the European Commission warns.
According to the estimates of the European Commission, the average overvaluation of apartment prices in Portugal is about 25%, which makes this country surpass other “overheated” real estate markets in the EU, such as Sweden, Austria and Latvia.
“The Commission estimates that average overvaluation is most pronounced in Portugal, at around 25%, which exceeds other overheated market segments in the EU,” said the report, which follows Brussels’ new initiative to improve housing affordability.
Prices are rising faster than wages
The European Commission warns that real estate prices are rising significantly faster than citizens’ incomes, which seriously threatens the possibility of buying apartments.
“Price growth has been stronger than income growth, reducing affordability for potential buyers, with marked differences between member states,” the report said.
Of particular concern is the fact that Portugal, the Netherlands, Hungary, Luxembourg, Ireland, the Czech Republic and Austria are the countries where the PTI ratio (price-to-income) has grown the most in the last ten years.
In those countries, the PTI today is more than 20% higher than a decade ago, which clearly indicates a growing gap between housing prices and the purchasing power of citizens.
The PTI ratio is a standard indicator that measures how expensive a property is compared to the average income of the population.
Housing becomes a social problem
During the last ten years, the average prices of apartments in the EU have increased by more than 60%, while rents have increased by more than 20%, due to which an increasing number of citizens face the problem of providing adequate accommodation.
The European Commission warns that this crisis is already spilling over into wider social and economic flows – it limits the mobility of the labor force, hinders access to education and delays the formation of families, which directly threatens the competitiveness of the European economy and social cohesion.
Brussels announced the first serious plan for affordable housing
In response to the growing crisis, the European Commission presented a new strategy for housing, aimed at increasing supply, encouraging investment and reform, as well as limiting the negative impact of short-term rentals in areas with a serious housing deficit.
Special focus is placed on young people, students, employees in key sectors, low-income households, and other vulnerable groups.
The strategy foresees closer cooperation with national and local authorities, in order to remove structural obstacles – from bottlenecks in construction to pressures in tourist zones saturated with short-term accommodation, reports Investor me.
“The commission will work with national, regional and local authorities to simplify rules and procedures that limit the supply of housing, with a particular focus on spatial planning and licensing,” the statement said.
Jørgensen: The housing crisis is also a social crisis
European Housing Commissioner Dan Jørgensen said in an interview with Euronews that Brussels is determined to tackle speculation and unfair market practices.
“Housing is one of the key issues of today. We are facing a housing crisis, and therefore a social crisis,” said Jørgensen.
Among the announced measures is a change in the rules on state aid, which will allow member states to finance social and affordable housing projects without prior notification and approval from the European Commission.
Until now, state aid in this sector was only allowed for limited projects intended for the most vulnerable categories of the population.
