Portugal’s bid to attract foreign money backfires as rental market goes ‘crazy’
Portugal’s bid to attract foreign money backfires as rental market goes ‘crazy’
House price inflation (and along with it rents) has been stoked quite purposefully with measure after measure to increase demand and reduce supply, from Golden Visa in exchange for €500k in "realestate investment" and massive tax incentives for european retirees and digital nomads to move to Portugal (at some point Sweden had to intervene as its own citizens were fleing paying any and all tax via that scheme), to a refusal to seriously limit AirBnB (which in Lisbon took 10% of places out of the housing market and turned them into tourist accomodation) and pretty much no more public housing construction (Portugal has one of the lowest rates of public housing in Europe)
Even when price to income ratios balooned to many times the historical average governments activelly continued to act to increase prices.
Unsurprisingly, most members of parliament in Portugal from the 2 main parties have "realestate investments".
Meanwhile yearly emigration out of Portugal is massive and now more than 50% of those leaving are young adults with university degrees (aka braindrain), the average age at which people leave their parent's house is in the mid 30s and birthrates are well below replacement rates (if I remember it correctly the country has the 4th most aged population in the World) because the cost of living is too high for the salaries paid and most of that is housing costs which afects mostly those who don't own their own place bought at 20-years-ago-prices, i.e. the just graduated and young adults right when they're having children.
It's a complete total fuckup which has already stored a decade or two of problems (thanks to braindrain and people being unable to afford having kids) all to make more money for a few politicians and politically connected assholes.
Add the forecasts for Portugal with Global Warming (it will basically become a desert anywhere but on the coast) and I think the country will be steadily collapsing in economic and quality of life terms for the coming decades.
All of this has been pretty visible for at least a decade, but portuguese management culture is complete total crap (as I can tell you from personal experience, here and by comparisson with Northern Europe) and politcians are the most incompetent of an incompetent bunch, so there is zero strategy, zero analysis and everything is an "unforseen problem" when things predictably blow up.
It's also worth adding that in addition to the portuguese exodus we are also "importing" lots of digital nomads who earn much higher wages and contribute to the housing crisis, along with lots of low skilled workers from other countries to work the jobs the portuguese left when they were unable to afford rents. These workers live in horrible conditions sometimes splitting a single room between several people. When their support networks fail they are forced to turn to crime which has increased greatly in Portugal.
I was always very pro-immigration but that is changing. I'm seeing everyone I grew up with leave. Their place being taken either by rich foreigners who treat you like you're a servant or desperate very poor ones who would run you over for half a job.
Meanwhile, you barely hear our language in our own capital. And it's visibly spreading to the other cities. It's scary. This is colonization with extra steps.
First, please don't mix "digital nomads" with the rest: they're a tiny number (in total, ever, adding up to maybe less that 6 months of degree-holder emigration from Portugal) and, worst, produce all the wealth from their work abroad and pay 1/4 the tax of the locals, so each of them isn't economically worth a single local highschool dropout, much less the economic value of the kind of degree holders leaving the country.
The "rest" are even more interesting: basically Portugal is importing people way less qualified that the average portuguese of working age (worse so versus those leaving) and it's being very overtly done to put pressure on salaries in areas like Tourism (which is basically the chosen "silver bullet" to go around all the problems in the Portuguese Economy: I refer you back to my point about just ridiculously bad portuguese management and political culture is) as well as to supposedly make up for the "population aging" (the very thing that was caused and is being made way worse by both low salaries and the policies to inflate house prices).
Pushing out well trained people capable of working in high-value industries and bringing in people with mainly primary school education or less isn't a strategy for improving the country (or in fact "strategical" in any sense of the word, unless there's some kind of strategy to empoverish the country).
Open door immigration is 100% to help politically well-connected Tourism Industry fatcats find workers for their companies whilst paying shit salaries (it's funny how they go on TV saying that they "can't find people to work and need more immigration" whilst refusing to, you know, pay better to attract the workers they need) and exploitative Agro operations growing produce for export who want to pay de facto per-hour even less that the ridiculously low portuguese minimum wage, to try to plug the very problem of "too many old people not enough workers to pay their pensions" that's being caused by continuous political choices to pump up house price inflation for personal profit of those very same politicians and their mates and to increase sheer human numbers for those politically connected companies which are in an economic position to take a cut of the entire GDP of the country (almost invariably holding monopoly or cartel positions due to political decisions) and who couldn't care less if GDP falls per-capita as long as the total number goes up.
The problem is not immigration per-se, it's how it's being done and why (especially if we follow the chain back to the "why of the why of the why" as it ultimatelly boils down to making certain politicians and their mates very rich by sacrificing the future of the country and everybody born in it).
Shit, the only good big thing in present day Portugal which is not being destroyed (even the investment in people in the form of Education, maybe the only intelligent growth strategy in this country, ever, is being corroded and destroyed) is the right to an EU Passport of everybody born here.
The problem is not politicians and politically connected assholes. You had a liberalization of the renting market done by the previous right-wing government, coupled with the appearance of Airbnb and low interest rates for a decade. This led to a situation where it was cheap (low interest rates) to invest in real estate, place your new apartment on AirBnb and easily recover the investment. Old landlords caught up to this and many preferred to evict tenants or increase the value asked to close to what they would get if they rented the apartment via Airbnb. And there was still the many years of golden visas for foreign investors, also implemented by the previous right-wing government. The left-wing government never did anything to change this, because all this real estate investment brought GDP growth to Portugal and when they proposed some semi-serious changes you had everyone benefiting from this status quo screeching that Portugal was becoming Venezuela.
But it's now got to a point where the prices are unsustainable to almost everyone and as you said a lot of people are excluded from being able to buy a house. And the situation won't improve in the next couple of years because interest rates probably will take a while to go down. As for the brain drain, that's an old historical problem. Heck, I had to emigrate last year and I am almost 40. The lack of stable work contracts, the non-existent salary growth from both the public and private sector already made thinking about settling down and having kids hard. These housing prices are just the final blow to the situation.
First, I disagree that a government which constantly harps about doing what's good for business, unconditionally I might add (not "good for business which are good for people", just good for any businesses), cuts down on Education and Healthcare citing lack of money whilst refusing to, for example, enforce the legislation on the taxing some asset (dams) sales by the private energy company of the country (which, by the way, was public, sold for a song and is riddled with politicians from the 2 main parties) and which has just saved a private airline with €3 billion of taxpayer's money with the full intention of privatising it next year, is left of center.
Whatever leftwingery they had back in the 80s has long left the stage and policywise they're now doing and defending what the mainstream rightwing party used to: less taxing of companies, less public spending and privatisations, only they added elements like the whole saving of private companies with public money to sell them back to the private (almost certainly for less than the public money put in them) ASAP or the selective closing of eyes to tax evasion (not avoidance, evasion: the illegal kind) as long as it was done by well connected companies, which in the old days not even the mainstream Right did.
Both parties of the power duopoly in Portugal do the same because as individuals their members and leadership are the same kind of people, as plenty of court cases have demonstrated and in fact, the supposed "leftwing" one seems to be the worst one, at least at government levels (though for the other one, all you have to remember is how in Germany a German Company was convicted for corrupting the Portuguese Government for a submarine sale, whilst in Portugal ... crickets).
We are in the shithole we are because the people in the 2 parties which have had a near duopoly of power in the country since 74 have massivelly gained from the actions that put us in this, all the while blaming the "other side" as if de facto their policies differed when it came to manage the country for their own personal upside maximization and screw the rest.
They play politics like a one-two play in football, passing the ball back and forth whilst advancing to score against everybody else, members of the same team, and only those who look at nothing else but the ball go around blaming one side, then the other, then the first side, then the other and so on.
Back when I palyed Quake, this strategy "to attract foreign money" had nothing to do with "Free for All" mode, it's more akin to "Capture the Flag" and using the grappling hook to camp from a hidden spot and just rocketing the flag carrier every time they picked it up.
Blaming a particular system of economics for power abuse is almost just lazy propaganda to push a narrative, any and every system in place will be abused by people who are unscrupulous, greedy, and/or corrupt sociopaths.
Capitalism is equally as corruptible as all the rest.
Corruption and ethics are the underlying concerns, not top ended ideals of politics that really only provide obfuscation of actual 'people' level problems beyond rhetoric.
There are definitely some systems that encourage more greed than others.
Private ownership is the cause of the corruption.
If the people running the business are also the workers, they’re not going to be anywhere near as likely to steal from themselves as a whole.
So yes, the system matters very fucking much and capitalism is inherently biased towards rewarding selfish behaviour.
$947 is about what a room in an apartment costs.
In a place where people make 1100 or so.
Portuguese here. The rental market in Portugal is completely separated from the reality of portuguese wages. As an example, minimum wage is 750€/month per 14 months. Meaning 875€/month if you count 12 months.
Rents in Lisbon for a bedroom usually start around 500€. And the situation in the other cities with somewhat decent jobs is getting as bad as in Lisbon.
That is not too far off what it is like in most cities in the U.S, believe it or not.
Where I am, minimum wage is $12. At 40 hrs a week this is $24,000 before tax. Roughly $16,000 after tax.
That's ~$1333.33 per month in earnings.
2023 fair market rent in my state for a 1br is $947, but in reality, the units that are available are closer to double that price. I'd say most 1br units are $1300 - $1700 in my area.
Our prices for a one bedroom apartment, depending on location, can also go that high, but I think you might be conflating what "a bedroom" means here. It's 500€ for a bedroom in an apartment, not the whole one bedroom apartment.
I think it's becoming like that pretty much everywhere in the western world
You should see Vancouver bc housing prices. 1 bedroom apartments start at like $1.5 million, average income is like $50k.
Thanks for letting me know that things can always get worse. lol
Say what?
In Portugal, we receive 14 months of salary. The normal 12 months and 1 month salary as vacation subsidy, and another as Christmas subsidy.