Low-wage Portugal has been deeply affected by the European housing crisis

LISBON, Portugal — Like a growing number of people in Portugal, Georgina Simoes no longer earns enough money to afford a place.

The 57-year-old nursing home caregiver earns less than 800 euros ($845) a month, as do about a quarter of the country’s workers. For the past decade, he’s gotten away with paying just €300 a month for a one-bedroom apartment in an unremarkable neighborhood in Lisbon.

Now that rents are soaring in the capital, his landlord is evicting him. He says he’s not moving because it will be too expensive to find another place near where he works.

“You live in this state of anxiety,” he says from his apartment, which has a partial view of the Tagus River. “Do you wake up every day wondering if I should stay here or should I go?”

Simoes and many others, including increasingly the middle class, are being squeezed out of Portugal’s real estate market by rising rents, soaring house prices and rising mortgage rates, fueled by a growing influx of foreign investors and short-term vacation tourists, among other things. In recent days, deepening fears about the health of financial institutions and the prospect of continued high inflation have added to the uncertainty.

Portugal’s centre-left socialist government presented a package of measures to tackle the problem last month, some of which will be approved by the cabinet on Thursday.

Between 2020 and 2021, housing prices in Portugal increased by 157%. According to Eurostat, the statistical office of the European Union, between 2015 and 2021, rents jumped by 112%.

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However, rising property prices only tell part of the story.

Portugal is one of the poorest countries in Western Europe and has long invested in a low-wage economy. Just over half of Portuguese workers earned less than 1,000 euros ($1,054) a month last year, according to Labor Ministry statistics.

A recent spike in inflation across the EU, particularly rising food and energy prices, and the lingering economic and labor fallout from the COVID-19 pandemic have exacerbated the housing dilemma in the 27-member bloc.

More than 82 million households in the EU are struggling to pay their rent, 17% of people live in overcrowded accommodation and just over 10% spend more than 40% of their income on rent, the bloc said.

Unequal access to decent, affordable housing affects young people, families with children, the elderly, the disabled and migrants the most.

In Portugal, the problem has been exacerbated by tourism, which is roaring back to strong pre-pandemic growth, and an influx of foreign investors who have found relatively low real estate prices in Lisbon and pushed prices up, pushing locals out. from their surroundings.

After attracting a record 25 million foreign tourists in 2019, Portugal attracted 15.3 million last year, a 158% increase from the previous year’s pandemic restrictions. Analysts expect a 33 percent increase this year.

For some, the long-awaited national success among foreign vacationers means being careful what you wish for.

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Rosa Santos, 59, who was born and raised near Lisbon’s 14th-century Castle of St. George, which overlooks the port city, says most of the homes in her neighborhood are short-term vacation rentals, mostly for foreign tourists. Visitors can often be seen and heard dragging suitcases along the cobblestones.

The rich traditions of the locals have disappeared, and today there is not even a bakery or grocery store, says Santos.

“It’s not a neighborhood anymore,” he said. “It’s not a city, it’s an amusement park.”

On a recent rainy day, police used backhoes to help municipal workers demolish several illegal makeshift homes on the outskirts of Lisbon that lacked electricity or running water. Families forced to live in them begged them to stop.

The shacks were just a few kilometers (miles) from luxury condominiums being built on Lisbon’s waterfront, where a four-bedroom apartment sold for €2.4 million.

Not far away, in the low-income neighborhood of Camarate near Lisbon’s airport, missionary worker Jose Manuel is helping needy families, some of whom can’t afford a room, let alone a house, and are being pushed out of the country. city.

“We are already talking about a room in Camarate for 400 euros, a house for 600 or 700 euros,” he said. “Anyone on minimum wage can’t afford a house.”

Prime Minister Antonio Costa says cities that lose residents will lose their “authenticity” and become a “Disneyland” for tourists.

Among the measures from which his government hopes to correct the market:

— Forcing owners of unoccupied properties to rent, favoring tenants under 35, single-parent families, and families with an income exceeding 20%.

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— The upper limit of the increase of new rental contracts compared to the previous contract to 2%.

— Ending the government’s “golden visa” program, which grants residency to wealthy foreign investors who buy property in Portugal.

— Stopping new permits, except in rural areas, for short-term vacation rentals through tourist accommodations.

— Conversion of commercial real estate to residential use.

The proposals have been controversial: some see them as heavy-handed and misguided, while others say they do not detail how they will work. And some are angry.

Hugo Ferreira Santos of the Portuguese Association of Real Estate Developers and Investors said foreign investment had stalled as people waited to see how the golden visa would play out.

“What I heard from international investors is that Portugal is not a credible country,” he said. “It’s a country that changes the rules of the game halfway through, and it’s a country that doesn’t welcome foreign investment.”

Short-term investors in short-term vacation homes are also hurt.

“There are people who have left their lives, created their own businesses, created jobs, have workers, and one day suddenly they are brought down without any prospects,” said Eduardo Miranda, head of the Portuguese association representing their interests.

Some measures require the approval of the parliament, while others may be vetted by the Constitutional Court.

Source: https://abcnews.go.com/International/wireStory/low-wage-portugal-europes-housing-crisis-bites-deep-97902410