The year 2025 is shaping up to be an important milestone for the real estate sector in Portugal, in a context of significant changes affecting public policies, market dynamics, and international scenarios. In this article, we analyze the main positive and negative trends in the real estate market for the coming year, particularly as they relate to young people.
Decline in Euribor Rates: A Breath of Fresh Air for Real Estate Financing
The decline in Euribor rates, which are expected to continue falling in 2025, is one of the most encouraging factors for consumers. With lower interest rates, the cost of mortgage loans tends to decrease, easing the burden of monthly payments. This scenario is especially beneficial for young people, who often depend on financing to buy their first home and who already benefit from measures introduced for young people up to 35 years of age, notably the public guarantee for home purchases, in addition to exemptions from transaction tax and stamp duty, not to mention the benefits granted in personal income tax.
However, the increased ability of young people and consumers in general to purchase a home will boost demand, which will collide with the rigidity of supply in the short term, putting greater pressure on prices and potentially mitigating the intended effect of some measures taken to solve the housing problem.
Excessive Demand versus Scarce Supply
The imbalance between demand and supply remains one of the biggest challenges facing the real estate market. High demand for housing, exacerbated by the growing need for accommodation for immigrants and tourists, combined with a shortage of supply in large cities, has pushed prices to unsustainable levels for the local market, particularly for young people looking to buy their first home.
This phenomenon is exacerbated by the lack of investment in the construction of new homes and the slow redevelopment of existing buildings. Although administrative simplification measures may alleviate this problem, the impact will be limited if a comprehensive strategy to significantly increase housing supply is not implemented.
New Land and Public Housing Law: A Step in the Right Direction
The approval of the new Land Law, which allows construction on rural land for public housing or at controlled costs, is intended to be a significant milestone in meeting the demand in the less favored consumer segments. However, this legislative measure, which aims to increase the supply of public housing, does not seem to be able to solve the problem in large cities, where its applicability is expected to be lower due to the scarcity of rural land.
On the other hand, by defining that 70% of the area built at controlled cost should be based on the median of national transactions, reduced by 20%, the government will have a lesser impact on prices in places where urban density is lower, i.e., in areas with lower demand and where prices will naturally be lower than the median. In addition, it is here that the new law will be most applicable, as these are the places where the supply of rural land predominates.
Therefore, there are still challenges to be overcome, such as ensuring that responses to the housing shortage are more geared towards the needs of the target populations, particularly in places where they are most needed.
More information, UrbiSeg Imobiliária.
Source: https://cruzlanca.pt/