Lisbon (AFP)

After years of rampant growth, property prices in Portugal started to stabilize in 2019 and the government is looking to bring them down by taking measures to help the middle classes find accommodation in big cities.

"The real estate market has entered a phase of consolidation", explains to AFP Patricia Barao, in charge of residential real estate within the consultancy firm JLL in Lisbon.

A cooling that led last year 650 real estate agencies to shut down, according to a study by the specialized website Imovendo.

According to figures from JLL, the number of transactions should reach 179,000 sales in 2019, as in 2018.

In Lisbon, 62,000 home sales were recorded last year for a total amount of more than 11.5 billion euros, figures almost unchanged compared to the previous year.

In the most expensive district of the center of the capital, where the square meter is worth 4,889 euros, prices even fell by 4.7% in the third quarter of 2019 compared to the previous quarter, a first since these official statistics began to to be published in 2016.

"We are in a stabilization phase after a period of price correction", which were underestimated compared to other European capitals, underlines Ricardo Guimaraes, director of the statistics company Confidencial Imobiliario.

- "crime of lèse-patrie" -

In the past three years, real estate has appreciated by around 20%, recalls Manuel Braga, consultant of the Imovendo site.

The socialist government was alarmed by this.

The prices charged in Lisbon and Porto, the big city in the north of the country, are "a crime against the homeland," said Minister of Housing Pedro Nuno Santos on Wednesday.

"For the vast majority of Portuguese, living in the city where they were born is a dream," he added, regretting that many were pushed to the suburbs.

In the historic districts of the capital, the real estate pressure, in particular under the effect of the new platforms of tourist hirings like Airbnb, reduced the market dedicated to the long-term hiring, already unimportant because three quarters of the Portuguese are owners.

To alleviate the housing shortage, the ruling socialists have just announced their intention to downgrade the benefits that have long encouraged foreign investment in real estate.

An amendment to the 2020 draft budget to be adopted next week provides for the end of tax exemption for 10 years for foreign retirees and the restriction of the granting of "golden visas" to non-European investors.

- "Relieve real estate pressure" -

Portugal has granted these residence permits since 2012 in return for an investment of at least 500,000 euros in new construction and 350,000 euros in renovations. If the amendment is passed, property purchases in Lisbon and Porto will soon no longer be eligible.

This measure should "relieve real estate pressure in large cities" and "attract investment to other areas of the country", justified the head of the socialist parliamentary group, Ana Catarina Mendes.

But it is "not as interesting" to invest outside the big cities, warns the director of studies at JLL, Maria Empis. "It is partly thanks to the golden visas that the renovation of Lisbon was possible," recalls its director, Pedro Lancastre.

PS elected officials also proposed to tax 10% of European expatriates residing in Portugal. The measure will only apply to newcomers and not to the approximately 10,000 retirees who already benefit from tax exemption for ten years.

These measures will be added to those already taken as a moratorium preventing the eviction of tenants over 65 years of age.

For its part, the Lisbon city hall has renovated certain buildings to offer them at moderate rents, and limited the accommodation that may be intended for short-term tourist rental.

© 2020 AFP