Buying a house in Lisbon requires a couple’s €3,000 salary


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Since 2017 there has been a worsening in housing affordability. Lisbon and Porto with “exuberant” prices, concludes FFMS study.

A two-person household in Lisbon needs to have an income of €1,540 gross per month each to be able to afford a medium-sized house (a 2-bedroom) in the cheapest parish in the city without exceeding the 40% effort rate. If you live in Porto, then the value will be slightly lower, at €1,185. This value corresponds to the 60th percentile of income distribution in these areas, but if we go back to 2017, the same house was accessible to a household in the 40th percentile in Lisbon and in the 20th percentile in Porto.

The accounts are contained in the study “The housing crisis in large cities – an analysis”, carried out for the Francisco Manuel dos Santos Foundation (FFMS) by Nuno Vilares, Paulo Rodrigues and Rita Fradique Lourenço. The work analyzes the evolution of the housing market and one of the conclusions is that Lisbon and Porto register an “exuberance of prices”. With covid, GDP contracted 8%, but household income was little affected, due to support, and house prices grew 8% and the use of credit to buy them as well. In 2022, with inflation, there is a decline in loans, but prices, these “maintain an explosive behavior” in those two areas, with the impact that this has on access to housing.

In addition to the monthly installment, it should be borne in mind that the initial capital that needs to be given as a “down payment” also increased for the median house from around 30 thousand to 56 thousand euros in the municipality of Lisbon and from around 16 thousand to 37 thousand euros in the municipality of Porto, between 2017 and 2022. And this even in cases where the bank valuation coincides with the transaction value, which happens less and less in these areas. Moreover, Lisbon and Porto are no longer unique cases and the same phenomenon occurs in all municipalities of the respective metropolitan areas.

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