Houses in Portugal, the most overvalued in the EU - Tourism and short-term rentals "shake" the housing market
House prices have risen sharply in the European Union over the past decade, with Portugal ranked among the countries with the most overvalued properties, according to a European Commission report published today, titled "Housing in the European Union: market developments, influencing factors and policies."
According to the report, between 2014 and 2024, house prices in the EU rose by an average of 50%, “but in Hungary, Lithuania, the Czech Republic, Portugal, Estonia, Bulgaria and Poland, the increase in nominal house prices exceeded 200%.”
Some of the main reasons behind this development include higher interest rates, high demand for housing from wealthy families and investors, the rise of short-term rentals, and a lack of new construction.
In some areas, house prices have become significantly more inflated than their real value. According to researchers, the artificial inflation of house prices is most pronounced in Portugal. “Prices are reported to be overvalued by about 35% in Portugal, which is the only country where the overvaluation has increased significantly by 2024,” the data show.
Among the factors that have most influenced the increase in housing prices in Portugal are tourism and short-term rentals. “The increase in short-term rentals in tourist areas is closely related to the increase in house prices and rents,” the researchers estimate.
The expansion of platforms like Airbnb has significantly interfered with the traditional real estate market, reducing the supply of long-term rentals and pushing up prices. “There is growing evidence to suggest that the growth of tourism in general and the expansion of short-term rental platforms have contributed to the increase in rents and housing prices in some coveted areas, such as historic city centers,” the report concludes.
The European Commission also points out that Portugal is the EU country where tourism has had the "largest impact on housing prices."
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