Monies set aside from Portugal’s Recovery and Resilience Plan for housing will go nowhere says economist
Funding set aside by the government from the Recovery and Resilience Plan to build 26,000 new houses by 2026 is unlikely to have a takers from developers because of the increase in construction and manpower costs.
This is the opinion of economist Ricardo Guimarães, the director of Confidencial Imobiliário who also says that the package ‘More Housing’ will have the opposite results to the ones the government is seeking to alleviate Portugal’s chronic affordable housing crisis.
“It is difficult to see how the goals in the RRP will be achieved because of an inability to use those sums and offset them against the increase in construction costs. There have been several cases in which there were no developers competing to build them (because of the costs)”, he told the newspaper Jornal de Negócios.
Guimarães says that there has been an increase in manpower costs and that the levels of investment involved are absolutely incompatible with the track record (of costs).
The economist is calling for an increase in investment in rental properties to offset the escalating the price of rents.
“Demand needs to be satisfied by supply. Our problem is a lack of supply. Property rents and prices have gone up because of a lack of supply.
“Owners feel that they can put up rents because of a lack of offer and the way to change that is to invest more in rental supply”, he says.
And adds, “The ‘More Housing’ package will produce the “opposite results to ones desired”.
“When the measure to put the brakes on rising rents was announced for existing contracts, that very quarter rents increased by 10% on existing contracts and have gone up 30% since then in like-for-like terms. In practice, what has happened is that the measures once again protect who is in the market and ignores the negative effects of those outside it”, he added.
And gave an example: “Recently, a very important operator in Portugal tried to do a build to rent and left Portugal. In Spain we have large investment operations. A private operator in Spain has a portfolio the size of the RRP”, he said.