Housing crisis bites deep in low-wage Portugal

Now, with rents soaring in the capital, her landlord is evicting her. She says she’s not budging because finding another place near work will be too expensive.

“You live in this state of anxiety,” she says in her apartment with its partial view of the River Tagus. “Every day you wake up thinking, ‘Am I staying here or do I have to leave?’ ”

Simoes and many others, increasingly including the middle class, are being priced out of Portugal’s property market by rising rents, surging home prices and climbing mortgage rates, fueled by factors including the growing influx of foreign investors and tourists seeking short-term rentals. Deepening fears in recent days about the health of financial institutions, as well as the prospect of continuing high inflation, have added more uncertainty.

Portugal’s center-left Socialist government last month unveiled a package of measures to address the problem, and some of them were set to be approved by the Cabinet on Thursday.

Between 2020 and 2021, house prices in Portugal shot up by 157%. From 2015 to 2021, rents jumped by 112%, according the European Union’s statistics agency Eurostat.

But the rising cost of real estate tells only part of the story.

Portugal is one of Western Europe’s poorest countries and has long pursued investment on the back of 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.

Across the EU, the recent spike in inflation, especially rising food and energy prices, and the lingering economic and labor consequences of the COVID-19 pandemic have aggravated the housing dilemma in the 27-nation bloc.