Is housing becoming less affordable? A study of affordability in the Portuguese housing market
ISSN: 0263-7472
Article publication date: 12 June 2023
Issue publication date: 15 November 2023
Abstract
Purpose
From the perspective of housing affordability, Portugal is an interesting case study, considering that Portugal ranks 5th in terms of price-to-income ratio and has experienced, since 2015, a significant increase in real estate prices.
Design/methodology/approach
The provision of housing is a critical social development factor. With the growing worldwide urbanization and the demand pressure over real estate in many cities, the problem of affordability has gained increase attention by policy makers. Housing affordability is hardly a new topic from a literature perspective, but the recent post-pandemic worldwide inflation growth has re-centered affordability as key topic in the housing agenda. This paper provides a comprehensive overview on past literature and a detailed analysis on the Portuguese market at the municipal level, by analyzing the changes in housing affordability in recent years.
Findings
Despite this growth, overall, affordability has improved. The study also shows the importance of municipal-level analysis, given the significant geographical differences. The authors' study confirms that many municipalities, outside metropolitan areas, exhibit low levels of affordability. Nevertheless, markets with higher average real estate values tend to exhibit even lower affordability, outpacing the higher levels of income.
Originality/value
Previous studies have focused on affordability issues on a national or highly aggregated level or focusing only on the two largest metropolitan areas in the country. This paper provides a deeper understanding on the inequalities of housing affordability between Portuguese municipalities.
Keywords
Acknowledgements
The authors are grateful for the Foundation for Science and Technology's funding (No: UIDB/04625/2020) from the research unit CERIS. In addition, João Fragoso Januário acknowledges the funding from InfraRisk PhD Program through (No: PD/B/150402/2019).
Citation
Fragoso Januário, J., Oliveira Cruz, C., Varum, H. and Faria e Sousa, V. (2023), "Is housing becoming less affordable? A study of affordability in the Portuguese housing market", Property Management, Vol. 41 No. 5, pp. 698-728. https://doi.org/10.1108/PM-08-2022-0059
Publisher
:Emerald Publishing Limited
Copyright © 2023, Emerald Publishing Limited