There are good arguments that foreigners should only be allowed to own real estate only in specific places and that citizenship should be by blood only for small countries - let's say under 100000 sq km and 50 million people. Too easy for them to be overtaken by global elite otherwise.
Citizenship-by-investment programs are dominated by small nations. Seems like smaller nations actually disproportionately favor absorbing richer foreigners.
The most extreme example is probably Comoros, which up until a few years ago you could become a citizen for $45k over-the-counter.
Tourists / foreigners buying houses i guess, although i predict that in the coming 10-20 years we'll be seeing mediterraneans escaping the summer heat in the north.
Unsustainable. If you're a wealthy individual living in an expensive residence surrounded by other wealthy individuals living in expensive residences, you still need garbagemen to collect your garbage. You still need food. Whether you order from local restaurants staffed by employees, or buy your groceries at the supermarket, staffed by employees, janitorial personnel, security guards, and managers, you're still relying on the labor of ordinary people.
If your power goes out or there is a water leak in your home, you need an electrician or a plumber. Preferably one who doesn't have to live five hours away. If you need an ambulance and medical attention, you need doctors, nurses, and medical personnel. Hopefully they didn't get priced out of a 50 mile radius of your home.
And if the world consisted of only millionaires and an army of robots, if everyone is a millionaire, no one is. A carton of milk would just cost $700 and a lower end house $30M.
Be a YIMBY. Embrace looser zoning regulations and more and denser housing where you live. And don't jack up the rent to market rates if you're already turning a profit.
It's not really unsustainable - Switzerland and other wealthy microstates show us the long-term outcome, which is quite desirable. In fact, the "ordinary people" will eventually benefit the most, since their wages will grow to match the prevalent cost of living. Transition can of course be difficult.
Switzerland does not qualify as a microstate at all. You're looking at a population that would fill Los Angeles, twice over...
The one thing that is sure is public transportation is night and day, and this helps a lot fight the mad-commute effect for non-millionaires.
If a place has only millionaires, prices for many basic things will be very high compared to other places, like for plumbers: there will be less plumbers and those willing to go there will be able to raise prices, a lot. Same for groceries, cleanup, ...
Apparently the wealthy with vacation homes on Cape Cod didn't get your memo. Our local businesses don't have enough workers due to unattainable housing. Enjoy your long lines, reduced hours and hollow communities! At least there will be lots of pickleball courts!
There is no workforce. It's not a matter of paying more, it's a lack of workers aka families. The average age of someone living on Cape Cod has increased every year for decades. The cost of housing after COVID went from "unreasonable" to "insane".
Local businesses and towns are throwing money at the few young people still here in an attempt to recruit workers but there just isn't enough to handle the scale up for summer volume. The band-aid for years was J1 workers but it's no longer enough.
The wealthy don't think about Cape Cod for 1 second once they cross the canal, or leave the runway in Hyannis/MV/Nantucket. They seemingly don't realize that their "tax dollars" which they claim are a gift to the local region, aren't helping or solving any of these problems.
What we're seeing now is consolidation of businesses, and the construction of worker "dormitory" housing. That's the future for our region. Multi-million dollar trophy homes, and worker dormitories.
And now robbing stores is becoming rampant as we can all testify by the loads of videos of "youngsters" entering stores and taking what they want without anyone doing anything.
> Be a YIMBY. Embrace looser zoning regulations and more and denser housing where you live. And don't jack up the rent to market rates if you're already turning a profit.
Eh. Waiting for people to forgo short-term profit from the goodness of their hearts under capitalism is a losing battle. The system must be built to prevent such behaviours and outcomes, rather than relying on individual good-will.
I mean, by that logic, waiting for people to choose to vote in such a manner that changes the system (from the goodness of their hearts, no less) is a losing battle also. Remember, changing the system (whatever that means) involves the same democratic buy-in as loosening zoning regulations.
Ultimately, the only way to change to change things under a democratic process is to win hearts and minds, and in either approach, people will have to make hard decisions. Either it's forgoing short-term profit by loosening zoning regulations or forgoing even long term profit by enacting whatever large scale systemic change one envisions will solve the problem (strict price controls, rationing, expropriation, etc).
> you need an electrician or a plumber. Preferably one who doesn't have to live five hours away.
FWIW the electricians and plumbers are the ones living right next door to the techies. They charge ridiculously high hourly rates and there aren't nearly enough of them, so they can keep raising their rates almost without limit. Try to find a decent electrician for less than $150/hr (this is SF Bay Area). A refrigerator repairman will charge you $300 just to walk in your house and diagnose an issue.
I hope Portugal won't tackle it like my country, with a cap on rent and other market distortions. I think that only makes it worse.
Fun fact: I - as a single - live in a way too big, luxurious and expensive apartment because of this. I rented it, when I was still working for the man and was making a killing. Now I live a much more modest 4-hour-workweek life. It would be better for me to move to an apartment half the size. Then a big family could live here nicely. But no way. No landlord in Germany rents to a freelancer who enjoys a "I'm mainly slacking off for a while" lifestyle.
There are other ways to be stuck, I'm in subsidized housing which I would like to give to the less fortunate but buying is impossible and leaving would mean half the space and four times the rent making me have less remaining per month than the less fortunate in my current appartment.
Large amounts of public-built housing (and I mean large, in the order of at least ~20% of the market) have a track record of working amazingly well to lower the cost of housing to acceptable levels and to give everyone a chance at homeownership.
Similar in Vancouver. If you've been renting for 7+ years, you won't move even if the place doesn't fit you anymore. You would be paying close to double.
Heavily taxing houses that stay empty and limiting short duration rental could be quite effective.
The issue is somewhat the same in Paris. It’s very hard to afford living there because non local use properties as an investment and prefer them staying empty than risking them degraded and people who want to rent make more money on Airbnb.
It’s fine if you want the city to become Disneyland but very depressing otherwise.
This issue of speculation on empty properties would be, if not solved, then at least immensely alleviated with a Georgist LVT (Land Value Tax), a tax on properties equal to the rent for the undeveloped piece of land.
It's easy to implement, the market exists to price that amount, and provides a direct incentive to either put the property to productive use or get rid of it.
Building physical houses to sit empty as a financial instrument has to be one of the peaks of capitalist insanity.
> Building physical houses to sit empty as a financial instrument has to be one of the peaks of capitalist insanity.
I quite agree, and I am therefore very suspicious that this is actually happening in significant volume! I have never seen convincing evidence that this happens, and it, at least superficially, makes no sense as a money-making scheme (Worried about degradation? That just means you should get insurance.) In general, it doesn't make financial sense to keep capital idle, and claims of such should be taken with a grain of salt, especially if the messaging is politically charged as "rich foreigners are screwing the common man over to make money".
I agree that an LVT would be the solution if this were actually a problem. And that an LVT solves many other problems unrelated to evil foreign billionaires.
Indeed. I'm most familiar with the US market so can't speak for European countries which may be different, but here's a graph of estimated vacant units held off-market against total housing units in the US:
Is this a high or a low number? On the one hand, <5% of units vacant sounds small. On the other hand, this is about 12x as many as there are estimated homeless in the US.
4% vacancy is what you get if people live in a house for two years before moving, and it takes a month before a new family moves in. Sounds pretty normal, and with no obvious way of using this idle time to help the homeless.
There are tons (like, really many) of empty, closed rotting buildings in Lisbon. My assumption is the owners are waiting for prices to increase or simply demanding unreasonably inflated prices until they find a buyer. I'd like to know the reasons for it. Anyway, whole blocks are empty. Heck, there is a large empty building directly next to the German embassy (and, ironically, part of the German embassy is also abandoned and empty even though it belongs to it).
There is also a substantial number of new luxury apartment buildings in my area with apartments that appear to be empty. Whether they are owned yet or to be sold is hard to determine but you can see when nobody lives there.
Exactly. There should be a tax on vacancy. We've made the 1) mistake of turning a very special need like shelter into a commodity or security vehicle, and 2) this commodity the owner can "hold-out" on in that makes it violate the principles of economics that we all supposedly agreed upon from above that the market is the most fair and best solution for people.
We already tax vacant property up to 12 times the regular tax when located in high demand areas[1] which includes all of Lisbon municipality. It's definitely had some effect as you see a lot less vacant property, but it unfortunately doesn't fix everything.
Hard to understand why anyone thinks gentrification or foreign buyers/renters are the problem if this is the case. Put people in the houses you already have, and build some more if needed, and you will likely find the price drops. But perhaps the people with decision-making power are hoping the price continues to rise.
Even more building were rotting before Portugal liberalized the market, because nobody would or could pay for renovations.
The truth is that real estate is merely a reflection of wealth. Some of that wealth is earned by hard work that others are not willing to put in while other wealth is just inherited and some people work hard and smart and still stay relatively poor.
Therefore we shouldn‘t judge so easily based on what someone has and go back to asking how it came about.
I have an apartment that sits empty, I'd love to rent it, I even have a license to rent it for holiday rental but it took 2 years and an half for the proper permits to be filled for me to renovate the apartment, once that went through, covid happened and it was not possible to find anyone to do the work, eventually the constructors I hired started doing the work but stopped in the middle claiming they can't find employees...
So I now have an apartment that's been empty and useless for 5 years, it did triple in value in the meantime but it's such a huge waste
You can hear a version of this story from apartment owners in many European cities, meanwhile the newspapers attribute out-of-control housing costs to a laundry list of more sensational causes...
Because I really like the location and view, I really wanted to renovate it, rent it for part of the year to tourists and stay in it for part of the year.
I don't think Germany is a great example at all cause they would rather rent out to a good German girl who's dad has money than to a foreign professional who has a longterm work contract in Germany. I agree that the annoying lifestyle expats are a problem, but bringing up something completely unrelated with a whole host of its own issues is a really weird way to make a point.
Lack of building when the population is still growing.
Encouraging single lifestyle, both by kicking out kids early and shacking up later.
Cases where sitting on an empty property is risk free.
Infrastructure increases taking valuable space.
Giving early birds great deals compared to today, making them sit on huge housing for a pittance and making moving out a terrible deal.
And politically, there simply is no immediate incentive to solve things when the current population of homeowners does not contain enough people to vote in favor of those that don't own homes.
Had absolutely no problem with it in the UK, US, or Taiwan. Most places you can just pay in advance to make up for lack of credit history. In Germany it makes you suspicious. So no, it's not everywhere. Given how many expats there are across the globe and given that there is 190+ countries on the planet, I'm not sure that Germany is actually in the majority here.
> I hope Portugal won't tackle it like my country, with a cap on rent and other market distortions. I think that only makes it worse.
That's one of the reasons why portuguese renting market is so bad. There were rent control policies for like 40 years. It has been phased out but the market still has the signs of its damages.
There also other contributing policies and the policies change almost every two years.
I'm one that could invest in the market, to bring more houses to be rent, but I can not risk 150 000 euros buying a house to rent (middle income market) and then having problems evicting with a non-paying renter, being forbidden to increase the rent due a new law or god help me if I need to use the court system to ask for renter damages.
So either we preference your 150000 euros (and of course interest and margin on top) or someone having a roof over their head, running water, and even the ability to stay in the same are and building community instead of moving each year due to capital seeking max gains.
This is an egregious misreading of the parent comment.
Someone in a position of economic vulnerability isn't going to invest in housing to rent out if there is a non-insignificant chance of damage to the property.
Moreover, this uncertainty has the perverse outcome of pushing the potential small landlord to use his funds to invest in something like a real estate investment fund - which will result in less local control over housing.
Are these 150K being used to build a new house or to buy an existing house?
I think it’s time the English speaking world realised that landlords are not providing a service, they are extracting a tax on people that don’t have 150K to pay a deposit.
The down payment would only be 10% of that. Existing or new house would be same, houses that are bought for rent are only available through mortgages which are a pain.
When I was younger I would really like to have more houses to rent... I don't really care if they provide a service or not, it's the cheapest and more liberating option available.
If the neighbors are a hell... I could just move out. Or if the house was not close to a gym I liked... move out.
I can have 150000 euros which I can use in an emergency, like being unemployed, long sick leave, needing move out of country due to family reasons OR I can risk not having it available when I needed and earn some money. Without the profit I have no reason for the risk.
Furthermore, me not investing removes a house from the renting market which makes it harder for people with less income, specially young people. To have a place to live because the same house will be available for purchase through a mortgage... and mortgages are not good.
You have to make a 10% down payment and you're almost always tied to a flexible interest rate... so people with less economic freedom are the ones to suffer the most.
You might disagree that things should not be like this which is fine, I'm only arguing over what happens now.
> So either we preference your 150000 euros (and of course interest and margin on top) or someone having a roof over their head, running water, and even the ability to stay in the same are and building community instead of moving each year due to capital seeking max gains.
Unless you are proposing to take his extra 10k euros by force, or let him invest it elsewhere?
If you want him to invest his 150k euros in housing you need to (according to him) lower his risk.
The fact that you can’t evict people at will and that you have to go through courts to seek damages (rather than robbing your tenant’s bank account), is a feature not a bug.
I do think that a state should exist primarily for the benefit of its citizens but this view had long been decried xenophobic at best.
However, you can't have it both ways. If
> countless stories of flats left uninhabited by some rich person who arrived at the building, bought two flats so that he could get a visa, and doesn’t even live there
then clearly not
> wealthy foreigners from all over the world, to whom we offer a paradise where they enjoy the same services but where they don’t pay or pay less tax than the general population
No mention of the vast holdings the church or bombeiros have in Lisbon and the insane amount of empty un-renovated buildings that are essentially just place-holders until the right CML-connected developers show-up with lots of money?
Yeah, the article wants to argue both sides of every issue.
However,
> countless stories of flats left uninhabited by some rich person who arrived at the building, bought two flats so that he could get a visa, and doesn’t even live there
So, the way it works is, as a golden visa applicant, you have to spend 7 days in the first year. The next 2 years, a combined 15 days (which can be spread whichever way you like). Subsequent renewals are different (21 days / 3 years). You can already live there when you apply, but you are not _required_ to.
You have to maintain your investment for at least 5 years (or until you become a permanent resident) and renew the golden visa twice. Then you can apply for permanent residency (or citizenship if you qualify), if you want to.
It's entirely conceivable that people would buy property and only vacation there. Which, if we are honest, is not a problem, given that large cities are excluded from the program. And cheaper housing does not qualify, either. So you would be taking property that's pretty expensive already (€500,000, €400,000 for low density areas) - OR requires the property to be older than 30 years old, and a minimum of €350,000 (or €280,000 in low density areas).
1) The investment doesn't need to be in a single property; you could buy up multiple smaller properties that sum to the amount you need, and rent them out or leave them empty.
2) There are also hotel investment options rather than buying up existing real estate, and those are still available in the big cities as they are considered 'commercial'
I believe most EU countries do this in some form, but Austria by far has the largest and most successful public housing scheme. It is very effective at controlling prices.
How so? It makes it cheap for the people inside the system but expensive for those that are outside of it. You don't solve a housing crisis by essentially subsidizing the cost.
No, the Austrian government builds a large amount of housing, which increases the overall supply of housing. People living in social housing do get lower rent prices, but having a massive builder in the market that keeps pumping out new inventory helps to make it a buyer’s market and keep prices low. Simple supply and demand.
In Amsterdam 57% of the rental stock is rent-controlled housing (capped at below €800/month). But that doesn't help at all when you don't keep building more: the average time on the waiting list for a new allocation is 13 years, and rarely move out. And if they do move out physically, it's popular to not move out administratively and illegally sublet it for a lot more than that they're paying (that's the story I've been told by locals).
Unfortunately in Portugal as in almost everywhere else the government has little incentive to do so: as the ruling class is comprised almost entirely of wealthier people with lots of assets, they (1) don't suffer from the insane housing prices and (2) indeed as proprietors benefit from the surge in housing asset prices.
Sure that is a headwind, but it's certainly not impossible to get your government to work for you instead of against you. While there are many examples of hopelessly corrupt, democracy-in-name-only governments, there are also governments that respond to the needs of the majority to keep from getting thrown out in the next elections.
Generally, having all these big money foreigners trying to come to your country is a good thing. It sure beats having no industry and you can crank up the tax heat on them as high as you want since nonresident-noncitizens don't vote. The real problem is that the Portuguese government is not being made to share the bounty of a few winners with the rest of the population, who are instead left to just deal with the externalities.
There is another path that does not involve locking the doors and hanging up a "closed for business" sign.
As a relatively poor country (for European standards) with, crucially, a lot of debt, it is very difficult to go for massive public spending projects as would be construction of enough public housing to bring it to the aforementioned 20% goal (there are actually proposals to this effect in Parliament), even though this would (1) help control the housing crisis and (2) actually easily turn up a profit in the mid-long run.
The EU could change all of this and go for true European cohesion with Eurobonds under the blue/red proposal... but that's another story ;)
> Generally, having all these big money foreigners trying to come to your country is a good thing. It sure beats having no industry and you can crank up the tax heat on them as high as you want since nonresident-noncitizens don't vote.
Well but do they? Where is the evidence that golden-visa/NHR recipients have actually helped create jobs, invest, create industry...? In fact, there appears to be evidence to the contrary: https://www.publico.pt/2021/12/25/economia/noticia/vistos-go... (translated: "Golden visa: in nine years, the program created 241 new jobs. Investments which led to the residency permits since 2012 amount to 6000 million euro, the vast majority of which went to real estate")
To your second point, that’s a policy problem. You can tax these golden visa real estate investors at any rate. You can have a different tax rate for nonresidents and an extremely high rate to penalize non-occupancy.
The country might be poor and in debt overall, but somebody is getting rich off this real estate bubble and it is within the government’s power to make them share.
I'm pretty sure you hit the nail in the head right here.
I wish we had public data showing how much each person in parliament/city government gets each month as rental income... would probably be pretty enlightening.
I doubt that even 30% of people would consider having government as a landlord good alternative. There are so many news of poor management that depending on the government to fix your plumbing in your house seems like a nightmare scenario to me.
This is actually a good role for government intervention. The exact mechanism is not important, but the concept is. Builders tend to be out of cycle with housing need due to the length time it takes to get a project to completion. After a bust, they get very skittish and underinvest for the first half of the cycle creating a shortage and boom. Government can provide a base level of housing builds to make sure the market doesn’t go too deep into shortage. And it doesn’t have to literally build them itself, just run programs that keep building housing. Ideally it even pays for itself.
It makes sense your idea on itself but in the case of Portugal would not have worked. The market bust happened around 2002 and then the government had a debt crises in 2010.
As it's common, the housing market reflects many errors and not just one.
Probably quite hard, seeing as all the Portuguese builders are over here in Switzerland (since they get paid very well compared to Portugal, but really badly compared for Switzerland) /hj.
(Probably similar for other EU countries with high relative purchasing power)
There’s much truth here, but it isn’t the entire picture.
Lisboa and Oporto are hideously overpriced, and it is indeed hard to see how a normal Portuguese earner can afford to live in either. Even Vila Nova de Gaia, which was the “cheap” side of Oporto, is now parlously expensive.
This effect has bled along the coast, and many coastal villages now ask €200k for an unmodernised one bedroom house.
But… the interior of the country is still facing depopulation, and property prices and rents here (between Bragança and Miranda) are still low. A five bedroom house in a town in decent condition can be had for €100k. There’s a beautiful 16th c. T8 palazzo needing modernisation in our nearest town for €80k.
People don’t earn much here, but they don’t spend much, either - a lot of food is home grown or hunted and bartered, heating is from firewood, and most folks drive perhaps 50km in a week, as they live within walking distance of where they work. Almost every house that’s had modernisation done uses solar for hot water and to supplement power. They deployed a gas network four years ago, and shuttered it last, as nobody is using it. Property taxes on the above properties are about €100 a year.
They’re desperate for people to move out here - lots of vacancies, not enough people to fill them. They’ve rolled out gigabit fibre to the villages, which they are literally giving away. We’re the only estrangeiros in the county, bar returning Brasileiros.
So. The reality is that which is being played out all over the world. Cities are becoming unaffordable for mere mortals - and, in my view, that’s ok, as cities are past their useful life as industrial hubs and have principally become destinations and speculative investments.
I’m not advocating some sort of “return to the land”, but rather that people are going to have to consider that perhaps they don’t all have to live in the top 5 cities in their country.
Sure, I can’t get takeout here, but I can breathe fresh air, sit at a quiet cafe and chat with my friends in the village without enduring traffic whilst drinking my €0.60 coffee, and support local businesses run by local people, rather than vast corporate chains.
Since we’ve moved here, particularly during the pandemic, we have seen quite a few young Portuguese couples move here from Oporto - some with family ties, some without - they’re starting businesses, families, renovating old abandoned homes. It’s genuinely exciting to see the beginning of something.
The pendulum swings, the market speaks, the world turns. Sure, we may be facing down collapse - of the current way of doing things. Not of all things.
> But… the interior of the country is still facing depopulation, and property prices and rents here are still low.
Some people just don't think very highly of "flyover country". The culture is not what they're used to. Return to the land makes a whole lot of sense though, now that the basic infrastructure for hybrid remote working is pretty much ubiquitous (courtesy of COVID).
That's one of the things that always bothered me about cost of living arguments it always seems to be it's to expensive to live anywhere (inside of these several highly desirable locations that I want to live exclusively and are very expensive.) There are plenty of places to live and plenty of housing, just not where people want to be.
Maybe it's just a matter of time? In Canada even the small cities got unaffordable , mainly after COVID started. With the interest rate raise a lot of people are hoping for a crash, some banks are saying it will be up to this 20-40% in some cities. Hopefully that helps. There's no where livable in Canada that is affordable to have a house right now.
Not gonna lie, im considering moving from BC to a farm in NS. With the mortgage i have on a 2 bdr apartment in the lower mainland i can buy up to 3 farms in NS, which is comically sad.
Side fact, not really criticism: When I see abbreviations for US states, my brain starts inserting anything that comes to mind and is a location. In this case:
"BC? British Columbia? NS? New Jersey, no that's not with an 's' ... Arg, no idea!"
It is not mandatory for me to understand all the abbreviations. Just that sometimes I would like to understand more, without having to guess states.
This is what attracted us to plan to move to Portugal. I could get something similar (from a geography/density perspective) in the rural US, but the people, cultural, amenities, and costs would not be what you described.
When I transition from tech, I hope to spend my time building affordable housing in Portugal and Spain.
It's not just takeout, it's hospital services, repair, dentists, big specialty stores, cinemas, concert venues, day care & after-school activities and so on.
Well the problem is (1) jobs and (2) many people simply don't want to live in a town with 1000 people and nothing to do.
(1) Bar agriculture and remote work, there are very few jobs in the interior of the country. I think in this forum we may have a skewed perspective since our sector is by far the one where remote work is most common. But most people simply don't have the option to earn 10x minimum wage from their computer while sitting in an idyllic mountainside village.
(2) Many people like living in rural areas. That's great! But many people also do not. I like nature walks and mountain biking and clean air as much as the other guy, but I also like restaurants and classical music concerts and nights out. I sort of have that right now by living in a rural area 10m away from a mid-sized (150k pop) town, but I don't think I would like very much to live in the middle of Trás-os-Montes for more than a few months.
The issue is that the Government should bring the infrastructure to the outback, as other European countries do. In another hand, I love the almost rustic Alentejo.. I guess having unstable regions like South America, Asia, Middle east and Africa is one factor, among other factors already described in this thread, raising housing prices...
There’s more work than you might think - there’s a perpetual shortage of white collar professionals here, from doctors to accountants to insurance agents. The ones who are here are perpetually oversubscribed, and are hiring. There’s also an absolute dearth of trades - there is one electrician, two builders, two plumbers, covering a huge area, with a three year waiting list. The younger couples I mentioned who have moved here typically have one working remote, the other starting a business… and then the remote worker stopping that to work on their partner’s business which is suddenly growing out of control. That’s not even considering things like ecotourism, the europa grants available for doing pretty much anything here, and public sector jobs, which they are filling with literally anyone who applies.
There’s also the whole virtuous cycle thing - more people move here, bring more commerce, more demand, secondary and tertiary industries develop.
I hear you on lifestyle, however - this wouldn’t have been for me when I was in my 20’s, but at nearly 40, and finally wanting to start a family, it’s ideal - and many of the younger folks moving here are in the same boat.
That said, there are restaurants, some really good, and transport around here has improved such that Bragança is only 30 minutes from Vimioso now, rather than 1hr+ it was 10 years ago, and it has all the amenities of a secondary city. Oh, and we had an excellent concert a few weeks ago - after the bullfighting. But I agree, it isn’t for everyone - but it’s perhaps for more people than might realise it.
> But… the interior of the country is still facing depopulation, and property prices and rents here (between Bragança and Miranda) are still low. A five bedroom house in a town in decent condition can be had for €100k. There’s a beautiful 16th c. T8 palazzo needing modernisation in our nearest town for €80k.
That's exactly what I saw when I was looking at properties there. And honestly the towns where some of the cheap properties were, were not half bad. They looked like they had all necessary amenities. I can't speak for their job markets though, which could be the main reason for the issue.
> people are going to have to consider that perhaps they don’t all have to live in the top 5 cities in their country.
I think it's an interesting question: why are there only a handful of "top" cities? What can we do to make cities that aren't desirable, more desirable?
What countries aren't struggling with this sort of dynamic?
I almost think that the US is doing pretty well with this in the sense that you can still move somewhere that's cheap relative to your salary, but that only holds true if you're able to do it with remote work. So, maybe it's not true at all.
The US is pretty bad from this point of view from what I recall, compared to other places where it's generally legal to build a broader variety of housing in cities. But perhaps it just got bad here early compared to other places.
Portugal's demographics, like much of western Europe, didn't look like they were going to change dramatically: https://en.wikipedia.org/wiki/Demographics_of_Portugal - so getting set up to build a bunch probably wasn't a priority.
It looks like immigration picked up a lot, and also there has been an influx of wealthier immigrants.
It will be interesting to see how they handle it. Having people with money move to your country ought to be a positive thing, but you need to build housing for them so they're not competing with locals - and winning.
That's changing quickly though. Most of the cheaper places did 'cheap' via sprawl, and that's kind of low hanging fruit that you need to move beyond in terms of housing options, sooner or later.
Combining increased demand with reduced supply has caused a huge "pig in a snake" scenario, which is going to readjust suddenly (arguably it already has around here) where built supply is starting to outstrip demand.
> The US is pretty bad from this point of view from what I recall, compared to other places where it's generally legal to build a broader variety of housing in cities.
It's really impossible to make generalizations about the legalities go building in the US, as there is no federal control over such things. There are some state-level laws in some states, but for the most part zoning is left up to cities and counties, leading to literally thousands of disparate sets of laws and regulations.
My city has historically heavily restricted high density housing (until the state stepped in), while the city literally next door has added enough high density housing for ~20k people in the past decade.
People study this stuff and have written about it extensively. By and large, in most US cities and towns, it's not legal to build anything but detached single family units in most of the city. So while each locale may have its own zoning code, they're rarely all that unique. There are some exceptions like Houston.
I don't think the US is doing a good job of this at all. There's a huge amount of policy-driven gate-keeping that's both ejecting lower income residents from tier 1 & 2 cities [due mostly to cost pressures], and preventing significant infrastructure projects that would ameliorate some of the increasingly pressurized (and politicized) demand signals (better public transport, more lower income housing, improvements in public education - infrastructure & programs).
I wonder how much Airbnb is to blame on the raising rents around the world.
Why charge a "local" rate when you can charge 5x that rate for a tourist paying in $$$? Even if you don't, just knowing about Airbnb's extremely high prices will most likely put inflationary pressure on rents.
I live in a touristy place in the US, and while STR (short term rentals) clearly don't help, the city's own statistics show they're not a huge factor.
More than anything, NIMBY neighbors keep killing less expensive forms of housing... 100's of homes, I would say, in the time since I started observing the situation.
STR's make for a convenient bogeyman that people can point their finger at. It's a bit more disturbing when you realize it's actually your neighbors; kind, ordinary people in most regards.
STRs almost by definition can't be the entirety of the problem, except in cases where there's an absolute limit on available units, and it's highly desirable as a tourist destination (Venice, for example).
STRs just slipped past the NIMBYs because they weren't on the lookout for it; it won't happen again!
In August 2019, ~1600 places were up for rent in Dublin. In August 2020, it was double that. Mostly from tourist hotspots with AirBnB people trying to shift to long term lets. They're back on AirBnB now, and housing is even shittier than it was before. Yes, there's other issues, but AirBnB has been a known problem in Ireland since at least 2016 when I was first looking at places to rent in the country.
The government has said they're going to start tackling the issue of short term lets this month. I'll believe it when I see it.
Didn’t Ireland have a campaign against greedy landlords with rent controls, 52% tax, no deductions, no evictions?! That would explain much better the disaster in rental market…
Not that much, Amsterdam is a notorious city for lots of tourism and high housing prices.
But pre-covid Airbnb was about 10% of the total stays versus Hotels. And tourists in total were about 6% of the overnight population throughout the year on average, again the majority in hotels. And after corona this is a lot less due to new legislation (which caps it to max 30 days per year without a hotel license).
But yes, tourism obviously pushes up prices, but there's a big benefit to the local economy of course as well.
It's quite a high blame I'd say. I actually have a friend who does this. He's been in the Airbnb game since pretty much they showed up and he now has 4 or 5 flats.
He could rent them out, but the long term rent contracts would not net him the same amount in a year than what he gets in just the summer months. Plus, long term contracts have a lot of other expectations from him as a land lord, whilst Airbnb is pretty chill.
From his point of view, airbnb is amazing, from my point of view when I was searching for a flat, I wanted to stab him in the face. It is what it is.
Some Canadian cities responded to this with a foreign buyers tax, notably in Vancouver. Florida has a method for balancing its "snowbird" population to do with foreign buyers. Personally, I think this is the effect of governments themselves no longer believing in nations and borders or a responsibility for them, and simply importing polarized populations of both very rich and very poor people whose effect in concert squeezes out the middle who made the country desirable. The cynicism comes from the 90's where multinationals globalized and just became financial rails for stateless revenue flows, and now governments saw the opportunities and are globalizing their constituencies, where if they want to stay in power, all they need is money and votes that come from importing wealthy people in exchange for buying Gold visas and "donations," and poor people to depend on their extractive policies. What we're watching is the intentional dissolution of the nation state and replacement of relatively equal populations with polarized ones. It's barely right/left at all, it's just nihilistic power as its own end.
Canada has a well-developed and diversified economy. Portugal needs to import a lot from the world, but has very little to offer in exchange.
They found something: their real estate and city center spaces.
The country NEEDS this foreign income. It's not a self-sustainable economy and the world won't work for them for free. If the Portuguese want to solve this issue, one way is to study what else could they develop internally that would be attractive in the world trade market.
Also, foreigners are looking for the European passport, not for Portugal per se. If Portugal were to follow UK's path, demand for their Golden Visa would drop dramatically.
It doesn't benefit the rich, only. By raising real estate prices, it stimulates the construction business, which is labor intensive and has a long supply chain. It benefits the entire economy of the country.
The question in my mind is how can a country like Portugal grow something home grown, industry/economy wise to ameliorate this situation?
Ukraine had traditional industries but it seems like the IT/knowledge worker base they built up over the past 5-10 years seems to be softening some of the economic blows of the war for them, but I can't imaging IT is the answer to every country...
Look at Singapore, for example. Its situation was orders of magnitude worse than Portugal decades ago. Now they are probably twice as better.
The key is: stop complaining about "the rich is this, the rich is that" and start thinking about how to be competitive in the 21st century. There are many opportunities, but are Portuguese citizens interested in taking the effort and sacrifice to explore them? The answer to this question is the real explanation for the hard time they're going through, not "rich-blaming".
Singapore's public housing is propped up by the fact that they have a huge proportion of their population that are totally ineligible for it, but pay the taxes to support it. I think something like only 60% of Singapore has the citizenship or correct criteria of permanent residency to obtain public housing.
If the US can put 40% of its working populace into some lower-rights having class, like strip their citizenship, we would have a comparable public housing tax base.
May want to go back and delete your comments about real estate then. Honestly without exploiting foreigners to subsidize their housing, these tag line here would probably just as likely be "Singaporeans Can No Longer Afford to Live in Singapore."
If you live in an advanced urban economy, with relatively open borders and free market real estate, you have to get with the program or get forced out. You can argue that's a good thing, or a bad thing.
-------------
>Why is this exploitation? The country is offering a lot of positive things to foreigner
Pretty unsophisticated logic here. The idea that something good was obtained, therefore a policy can't be exploitive, is on face absolutely an unfounded and absurd claim.
I bet they're happy to live there, despite the housing costs.
Why is this exploitation? The country is offering a lot of positive things to foreigners. I'd love to have a Singaporean passport and be able to live there if I could afford.
May want to keep your comment deletion considerations to yourself.
The situation in Singapore is different. The foreigners are not high-income people who chose to live there. Only about 28% are skilled labor. The foreigners _may_ be happy to live there but I wouldn't make that assumption without checking. Just because it's better than their alternative doesn't mean it's good, or even acceptable.
Source:
> [immigrants population is] 1.23 million, out of which about 351 thousand were classified as skilled labor. Most of the foreign workforce [...is employed...] in construction and the service industry, or as domestic help.
> If the US can put 40% of its working populace into some lower-rights having class, like strip their citizenship, we would have a comparable public housing tax base.
The US is already working on this, albeit unintentionally.
Undocumented immigrants were at 3.3% of the population in 2016 and the numbers have absolutely exploded since the beginning of the Biden administration, with 2 million apprehensions so far for in 2022 [0]. The cumulative effect of this over just a single term of the Biden administration will completely reshape the demographics of most of the border states (and most major cities of the country), as the majority of immigrants are arriving with very little means, extremely limited ability to speak English, and will be mostly restricted from accessing the US financial system without legal residence status, hobbling them financially and forcing them into informal work arrangements.
Undocumented immigrants tend to be an overall good for the citizen economy since we can exploit them, charge them sales tax etc, and then not offer them public services in return. Hopefully the cheap construction labor will improve the housing situation in the US.
Undocumented immigrants have the same access to public services such as public education, medical care at hospitals, access to court systems, police, fire, etc.
Undocumented immigrants have access to the court system and police that will arrest them the moment they are found to be undocumented? Even if they ostensibly could use it they would avoid taking the risk
This point is about 20 years out of date and is no longer true in most of the country. Most local police, aside from border states, will not inquire about immigration status when dealing with the general population and many larger cities actually refuse to cooperate with ICE immigration detainers on inmates in their local jails for non-violent offenders.
And yet ICE hangs around those locations and even goes as far as to deport people they had a court order to not deport. That chilling effect would make undocumented immigrants avoid authorities unless you believe they are irrational.
I hate to be that guy but do you have a source on undocumented immigrants availing themselves of the legal system en masse in the US?
A record number of arrests can mean there is a record number of immigrants but does not guarantee that is the cause. Increased enforcement of the border would also lead to higher arrests and subsequently reduce the inflow of immigration
The current administration has gone back and forth on this. Initially the policy was to be as "Un-Trumpy" as possible on border policy, but that had the predictable effect of encouraging more illegal immigration simply by changing the narrative in the source countries. Now they've quietly restarted a fair amount of border wall construction but their options for solving it logistically are very limited, as the only way to address the massive influx is to rapidly scale the personnel on the border which can't be done overnight (unless the National Guard is used, which would be completely rejected by the liberal base).
If you're interested in unfiltered perspectives, I would encourage you to focus on articles that specifically quote active Border Patrol agents who are working on the border. It's quite different than anything you hear from Washington DC.
I have spoken extensively with Border Patrol agents. While they were faking dog alerts, detaining me for 16+ hours, strip searching me, writing obscenely vulgur and false statements about the intimate parts of my body, and sharing it with judges and even the united states assistant attorney, cuffing and shackling me and driving me to multiple hospitals across my state for "internal examination" while doctors refused to respect my declining of consent, even though (for the first 12 hours) they had no warrant or legal mechanism to perform "medical care." While they were tossing me in jail cells, full of people I can't speak to, without being charged with any crime. While they made me perform my bodily functions in front of them, and they searched through the effects found thereafter. While they were fingerprinting / booking me without even being accused of a crime, nor arrested (which is normally only reserved for non-citizens).
They degraded me in almost every way possible, except penetrating me, and one other lady who they dragged to the same hospital as me wasn't even that lucky. Fuck em. Oh yes, I'm a US citizen (who looks white, middle class, speaks fluent hick english, normal), with an unquestionably valid passport who has never broken any border related law, and they never found anything. I would rather 100 illegals get through than any other single person be treated the way I have by border patrol. Border Patrol is a criminal organization, depriving rights under color of law and should be prosecuted under the RICO act.
MAGAs are blaming this on Biden rather than on deteriorating political situations all through Mexico, Central, and South America lol. It's a lot easier to blame the president tho.
Not a MAGA so I can't speak for them, but the "root causes" angle is really just a dead end talking point to deflect and allow inaction on this issue.
As long as salaries in the US are double, triple, or more than people can make in their home countries, there will always be more economic migrants than the US system can accommodate. It's a very simple case of supply and demand. No "root causes" strategy is going to change anything about the situation facing destitute, rural laborers in the Northern Triangle countries in the next 5-10 years. It will always make economic sense for them to attempt to immigrate to the US. The only thing that will stop them is a significant deterrence policy from the US government.
Your logic doesn't hold any water. The pay gap has existed for decades. The reason they're coming now is because their countries are falling apart and they have no stability at all in their lives. That is what has been getting worse for them. Money is great but food, shelter, and safety are far more important, even to the most extreme capitalists.
I think maintaining distinctiveness as a country is the best possible economic security, instead of turning it into an airport mall of fast food chains and crappy condos. France has maintained this somewhat, but not without a lot of struggle. Globalized chains create a radical monopoly in the cities they are in because they reduce the amount of risk/reward for local entrepreneurs, and require high amounts of capital to start. It's why downtown SF is such a cultural desert of basic and Times Square is just a theme park to itself. The policies that encourage globalized businesses create a homogenization that makes the desirable diversity that emerges organically impossible.
Portugal could impose a foreign buyers tax, use it's egalitarian/socialistic political culture to incentivise some small-n natalism, and leverage the unbelievable cultural resources it has as somewhere that is a respite from the blob of tourists that it has allowed to imbalance its economy.
It's not so much IT that would change the economy, but honestly - math. It's the only real social advantage that a country can organize to leverage, and the next country that triples down on its math education investment is going to be the next power base. Given what I've seen there that the article captures perfectly, it's probably their only hope.
Unfortunately education in Portugal is one of the worst in Europe. It would need a massive investment with a visionary direction to start to see results 15 years later. 4-year terms do not lend themselves well to long-term national projects like that.
Ironically, excellent education might be one of the most positive legacies the Communist regimes left to Eastern European countries, and part of why countries like Estonia or Poland will be better poised in the near future.
It's not just Ukraine. Central and Eastern Europe in general has seen plenty of sustained growth. You just need the right policy attitude for it, which has historically been quite problematic in places like Portugal (see "The incredible shrinking Portuguese firm" for one especially clear example).
Portuguese IT is pretty good in general, and that could easily have been part of the solution. The problem is that there was a large exodus of talent in the early 2010s (including yours truly), and that has caused some serious brain drain.
The company I work for has 3 devs in Portugal, working remotely... good people, very skilled, and it's much more affordable to pay them well compared to their local market than trying to hire locally, even if locally (more expensive European country), salaries are still a far cry from those of the USA, let alone Silicon Valley. With remote becoming widespread, it's hard to believe Silicon Valley is still willing to pay so much more money for devs than hire remote workers in Portugal and numerous other countries with high education and infrastructure, but much, much lower salaries.
> With remote becoming widespread, it's hard to believe Silicon Valley is still willing to pay so much more money for devs than hire remote workers in Portugal and numerous other countries with high education and infrastructure, but much, much lower salaries.
In the US there are 50 states to choose from for remote workers. And then outside that is the rest of North/South America all within a narrow time zone band.
I read somewhere that there was a raise in bicycle factories in Portugal. Some euro companies are attractee by the idea of being able to put a made/assembled in europe label while keeping labour cost low, avoid asian supply issues and portugal provides that.
It's just parking money. It's the last thing a socialist country like Portugal needs, because it screws up the real estate market making housing unafordable to the general population, who lives, works there, pays taxes and maybe has kids. What they can do is tax all property as if one is renting it, like Switzerland does and use the 6 month median rent as the tax base.
do the people moving there not pay taxes, work there, and raise kids also? I think I'm missing the point. It's simple to solve it by making foreigners pay much higher annual taxes on the privilege to live there and capping real estate prices for locals vs foreigners. Prevent foreigners from actually being able to buy real estate. Then everyone wins.
Not really, they're either retired or buying property to park money, like the rich Chinese are doing in Vancouver and Auckland. The issue is that they already bought real estate and drove the prices up, so now is the perfect time to extract taxes from them.
The Lisbon downtown is cruise ship territory anyhow, I fully understand why a group of youths was protesting against (those kind of) tourists. They treat every city like it's a theme park.
I remember travelling to Portugal in the early 2000's and our host describing Portugal's national bird as the (construction) crane. Not sure if the pun translates well to other languages. Are they not still doing that?
>By raising real estate prices, it stimulates the construction business, which is labor intensive and has a long supply chain. It benefits the entire economy of the country.
Maybe, but only if the increase in wages paid keeps up with the rising rents. And remember that in unregulated capitalism, most of the income from increased economic activity is captured by the wealthiest tiers, with only negligible increases for the vast majority. The rising tide indeed raises all boats, but it raises some boats far more than most. If rent rises 10% but median wages rise only 2%, most people will be losing ground, not gaining.
I disagree,
Portugal does offer something interesting:
Cheap labor.
In fact, some of the cheapest in the EU - both qualified and non.
It even can be said that the current Portuguese Economic Model is intra-EU salary dumping.
Foreigners buying land there are because it gives them a path to European passport or at very least nearly instant permanent residency. Not because they want to live in Portugal.
Portugal requirement is "just" €280,000 which is extremely low - their neighbor's, Spain, requirement is €500,000.
Whichever country has "good" real-estate prices and golden visa requirements to match will have foreigners buyers.
Absolutely now way that the "votes that come from importing wealthy people [...]" are going to be enough to get politicians elected - not enough wealthy people in the world. The real risk is the continued rise of populism which will result in cynical policies rather than real solutions for dealing with the increasing wealth gap.
Yeah, not to mention that people on visas can't vote. It's definitely a flaw in the causality chain, but at the same time I empathize with the frustration of the Portuguese people.
Not directly, but a extremely wealthy person without a vote who can make campaign donations directly or indirectly arguably has a larger impact than the average voter. For example 90% of house seats go to the person who spent the most, though causation isn't necessarily always the case.[1]
There are also countries like France which only imported cheap and poor labor. France never tried or even discouraged rich people to settle in the country with punitive taxes (compared to our neighbors and other western world countries). For instance London has (or had) rich Russians/Indians/Pakistani investors who made London their residence, not the case for Paris, foreign real estate owners don't take French permanent residency.
And nowadays, we are left with some politicians who promote economic immigration even when there is no need or deny any form of control on illegal immigration mostly to import voters.
> Personally, I think this is the effect of governments themselves no longer believing in nations and borders or a responsibility for them, and simply importing polarized populations of both very rich and very poor people
> It's barely right/left at all, it's just nihilistic power as its own end.
These statements are skillfully leaving out "ethno" part of nationalism. Once you add that quite obviously real and active element back, it's very much a left/right difference.
The left's solution to the problems brought about by globalization is to subtly bias the scales of re-industrialization policies toward the domestic labor market - evidenced by things like the battery materials sourcing and assembly location requirements, and income limits of the recently passed EV tax credits.
The right's solution to this has been playing on fears of a purported invasion by non-white citizens from lower income countries. A decade ago that would have been a controversial claim to make about the right, but today's right openly proclaims those ideas.
Portugal's case is interesting because they lived under a nationalist dictatorship that only ended in 1968, so many people alive today remember living under that. In my travel there, I found that many people in the age groups that vote heavily conservatively in the US and UK instead vote democratic left as a result of their lived memories of nationalist dictatorship.
Portugal does need to figure out what else has to offer the world economically in addition to great weather and beautiful cities and countryside, in order to have a better balance of trade, but it's unrealistic to think it can do that while shutting down immigration.
The "ethno-" in nationalism isn't silent or implied though. Canada has been a very heterogeneous nation for over a century, Israel is also very heterogeneous where people are bound by religion and not ethnicity, France and Spain have a huge and integrated north african populations and they are French and Spanish, full stop. Brazil, also a nation with as much global diversity as is available.
This trope that nations as entities are somehow racist is more an artifact of the critical theory that calls everything racist by default, and not of how people actually live together.
> ... Stoking grievances over the increased diversity of those countries ...
The underlying grievance is of course not over "increased diversity" per se but rather the long-term decline in civic attitudes. The progressive left expresses the exact same concerns in a different wording, by decrying the increased "marginalization and exclusion" that's seemingly entailed by such diversity. Guess what: they're all looking at pretty much the same thing.
> The underlying grievance is of course not over "increased diversity" per se but rather the long-term decline in civic attitudes.
I fail to see how the previous US president's complaints about people coming from "s*hole countries" and the exhortations from the Charlottesville rioters about how "Jews will not replace us" are grievances about "decline in civic attitudes". Try as one may to dissociate them, but these are the faces, words, and animating motivation of nationalism today.
The sad truth is that Jews have always been used as a convenient scapegoat for grievances of all kinds, and this is just as true on the left as on the nationalist right. For example, Marx famously blamed the rise of bourgeois capitalism on the Jews, and this casual anti-Semitism was picked up by many on the left.
> this is just as true on the left as on the nationalist right. For example, Marx famously blamed the rise of bourgeois capitalism on the Jews
Your argument is intentionally mixing "is" with "was".
Marx died 140 years ago, and there are no ethno-nationalist voices of significance on the left today. In the US context, after the civil rights movement of the 20th century those people left the Democratic party as the parties realigned themselves.
Today it is largely a right wing phenomenon, carrying forward the tradition of right wing ethno-nationalism that persisted from the previous century.
Whether or not Jewishness is completely an ethnicity is debatable, but a very large number of Israelis (and Jews across the world in general) aren't religious at all -- they see their Jewishness as being defined by their ancestors who were practicing Jews rather than by their own beliefs.
Vancouver is a disaster in housing affordability, economic opportunities (outside of real estate), and they have a very big and public homeless crisis.
They're very closely linked problems. The easiest way to solve homelessness is to give the homeless a place they can call home. Which is a lot cheaper if housing is already in abundant supply.
About 1/2 of homelessness is not a money problem, it's a social/behavioural problem.
The homeless people in my neighbourhood are all crack addicts. They get up and urinate/shit 3ft from where they are standing instead of walking 100ft to the park. They are 'feral'.
If you gave them a 'home' it would immediately be a crack den for them and their buds. The bathroom or anything else would literally never get cleaned ever. It'd fall into disrepair quickly. There'd be no hope of them having any kind of job or anything like that.
The other 1/2 are temporary homeless, usually due to some kind of calamity. Housing prices isn't so much the problem a they need to be 'stabilized'. A 20% shift in rental costs will not affect those people very much.
Low housing costs can positively affect a huge swath of people, freeing up income for other things, but it won't change the number of crackheads on the street and probably not the % of people that 'fall out of the system' for a few weeks.
High housing costs are mostly a strain on working people.
w
Just build more. If foreigners want to buy overseas property, then just increase the supply.
Oh, and tax the unimproved value of land and give the proceeds to the Portuguese citizens. This will dampen the effect while supply of housing matches demand.
One of my students got a job offer in Portugal before the pandemic. He personally came to thank me for being his teacher; he is a good, dedicated student.
Pandemic came, he stayed in Brazil doing remote work. Found him a few days ago. He told me he gave up going to Portugal and decided to stay in Brazil for now mostly because cost of living there. His initial salary would be 1.6K euros.
This is all the more reason to state it as a yearly salary. There are only 12 months in a year. You might get 2 extra paychecks but those are bonuses/irregular payments; there aren’t magically 2 extra months in the year.
For people asking about the salary: yes it is per month. Also compare it to Brazilian reality: median programmer salary here is, according to a quick google search: "The estimated salary for a computer programmer is $62,420 per year in Brazil, IN.", which comes to around 10-12K euros a year. My experience when I was a developer is really around that value. Getting 1.6K euros a month is a VERY good initial salary in Brazil, specially if you live in low cost of living areas like Northeastern backlands.
"The estimated salary for a computer programmer is $62,420 per year in Brazil, IN."
As sibling has stated, Brazil (properly pronounced "BRAY-zil") is a small town in the U. S. state of Indiana. What amazes me though, as one that grew up probably 20 miles from the town, is that anyone in Brazil, IN is paying $62K/year. But it's been 30 years since I lived anywhere near there, looks like it's grown a little.
This is not just Portugal. I see similar sentiment in Canada where young professionals in Vancouver or Toronto complain they can't buy their first home and Vancouver has been "sold out" to foreigners. Similar sentiment in Australian major cities as well.
This is interesting, because (at least in America) the current rhetoric is that housing was laughably affordable up until the 70s(?).
Now, even in suburbs, housing is far more expensive than most wage earners could expect to afford.
Maybe we are thinking of two different sides of the same coin, but I would genuinely be interested in reading articles from the ~mid-century describing what you suggest.
The problem in the US is pretty obvious. We are the time period where the largest generation of Americans (the boomers) are at the retirement, or about to retire point, at the same time the Zoomers, which are a decent sized generation, are entering the housing market.
Over the next several decades as the boomers die off or move to retirement homes the housing supply will increase substantially, and the value of properties in most of the US will plummet.
I see the same cause, but to me Boomers aren't limiting supply as much as many are relying on passive income to maintain luxury lifestyles. When they downsize, they're going to move to retirement homes that have $4-6K/mo rents at the midrange.
As they die, and pass on their property, their kids will just retire young and rents will still rise, along with the prices of luxury goods.
I'll believe that house prices are high because of constrained supply when I see the prices of luxury goods drop.
> This is interesting, because (at least in America) the current rhetoric is that housing was laughably affordable up until the 70s(?).
I always find this a bit of a disappointing discussion, cherry picked to the extremes.
If we're being honest in talking about the cost of housing, we'd try to make apples to apples comparisons.
For example, if we used to eat apples that were 2 inches in diameter, lacked sweetness, had lots of seeds in them and started to rot after two days, and then 50 years later the average apple was tasty, 10 inches in diameter, seedless and juicy and lasted two weeks, you wouldn't necessarily conclude that because its price had doubled that apples have become more expensive.
But we kind of do that with housing.
Since 1969, homes have more than doubled in average size. Such homes were shared by 3.3 people, now by 2.5 (or 25% fewer people per house). And we used to pay 10% interest, now 5%.
So we have 2.6x as much square footage per person, and pay half the financing cost as we did before. And median nominal personal income tenfolded since the 60s. Of course you expect home prices to increase by a lot, it doesn't mean housing was laughably affordable and now isn't.
In fact there's quite a few studies which show that a unit of housing (e.g. the percentage of income spent on a square foot used by 1 person) has gotten cheaper. We just happen to consume more of it, and share it with fewer people, and pay less to finance price levels, which pushes the price levels to new heights without housing itself having become more expensive. [0]
If you then take into account the quality of housing and neighbourhoods, you see even the above is still an apples to oranges discussion. The amenities inside the home and in the neighbourhood are simply no comparison. I literally have a supercomputer allowing 3D simulations of any kind known to creativity on a screen with better quality than a 1970s movie theatre (I'm talking about a PS5 on a 4k screen) in my home. And I live in a town with 190 nationalities and as many kitchens within a 15 minute commute, just like parties with every denomination of music and dance, multiple universities and schools teaching just about any skill, shops selling just about any worldwide product I'd like. Of course all this access comes with a price because there was scarcely a place on earth like it 50 years ago, and now my city (Amsterdam) has many equivalents around the world, Lisbon being an example named in the thread's article. If you put our lifestyles and general wealth of pretty ordinary people like myself in these cities to the test of any city 50 years ago, you'd maybe find some of the very elite in NYC and London living like that, and that's it.
[0] https://www.forbes.com/sites/steveforbes/2021/06/25/us-housi... -- this isn't a proper study, but does substantiate some of the claims I made above. It's even missing some things (it overestimates principal paydown as a cost rather than a cashflow, and it doesn't account for quality differences).
Housing prices rose with inflation for 400 years, and after 2000 suddenly started hockey-stick growth. Unless you think the quality and size of housing that people demanded only radically changed within the past 20 years, your theory is lacking for me.
I sometimes put a footnote in when I mention that house prices haven't changed in "400 years" because the records are from the Netherlands, but in your case that makes them more relevant.
> it doesn't mean housing was laughably affordable and now isn't.
I appreciate your approach, and I hadn't considered this perspective, but it still rings hollow to me:
Can I purchase 1/2.6 of a house? Just because the unit cost of housing has gotten cheaper doesn't mean _owning a home_ is more affordable.
Sure, I'll accept larger homes are being built at cheaper unit-cost. But those homes are still being snatched up, continuously "above market". Why aren't more smaller homes being built at similar unit-costs?
The problem is land has gotten expensive, not so much construction. Also, regulations and the like generally raise the bar for what is considered an acceptable house, which also contributes to rising prices (eg. things like mandatory minimum parking, housing amenities, etc.
Some places want to ban apartments smaller than a particular size because they are "expensive dog-boxes", which rather misses the point. I imagine the logic is that larger apartments will be available for the same price if such comes to pass... People are capable of impressive mental gymnastics.
Yeah, but it's much worse in Portugal, especially Lisbon. Here are some median home price to median income ratios for various cities (from Numbeo: https://www.numbeo.com/property-investment/in/Lisbon and corresponding pages for other cities):
- Lisbon: 18.06
- Porto: 13.55
- Sydney: 9.09
- Melbourne: 7.05
- Vancouver: 12.62
- Toronto: 11.82
- San Francisco: 7.02
- Los Angeles: 7.47
- New York: 9.99
I see three colluding factors causing a global cost-of-living crisis:
- Increasing income inequality short-circuiting the backpressure role of market pricing (and, more specifically, the use of home ownership and immigrant-investor programs as a way to sidestep restrictive immigration systems)
- Countries attempting to replicate the American suburban lifestyle, which is economically unsustainable as voters are incentivized to constrain supply in favor of "line go up"
- The economic gravity of living in a large city.
The econ 101 explanation of markets is that increasing price lowers demand, but this is determined by the "elasticity" of the supply and demand curves. The shapes of the curves determines what the market will do when supply or demand shifts. But if these curves are straight lines, or "inelastic"; then suppliers or buyers do not compromise on quantity and the market gouges people.
Supply is inelastic: most cities are hostile to redevelopment and all the economically-viable land in the city has been used up. No matter how expensive housing gets, people will not be able to build more of it, so price goes up more. In fact, when housing gets more valuable, there is more political resistance to increasing supply, which makes prices go up more.
Demand is inelastic: most housing buyers need to own a house. Homelessness is at best inconvenient and at worst illegal. Moving out of a city is expensive, and will require finding new employment, possibly at a lower hourly rate or salary.
The end result is that the housing market works less like a market and more like NFTs pre-a-few-months-ago. It is politically engineered to ensure quick and profitable exits for the vast majority of homeowners. However, this process cannot go on forever; because eventually home costs will outstrip wages, which puts backpressure on the whole "line go up" thing.
This is where the rich and powerful come in. They do not respond to pricing backpressure the same way you or me do. If a flat in Portugal is a million euros instead of half a million, who the hell cares? They can afford it anyway. They represent "greatest fools" - people who can resolve a speculative bubble by just buying the asset and not caring about it.
It's also kind of a mistake to say that "the Portuguese can no longer afford to live in Portugal". The population is not a monolith; it's more correct to say that today's middle class Portuguese cannot afford to live in their own country, but prior decades' middle classes absolutely could have, and the price inflation in the housing market is specifically to the benefit of those people.
> - Countries attempting to replicate the American suburban lifestyle
Really, where? I thought only fractions of the anglosphere replicated this (like parts of Canada). Extremely few Europeans would want that lifestyle, for instance. The trend seems to be moving aggressively in the opposite direction, with large and dense cities attracting the majority of new people.
It's not parts of Canada - it's all of Canada. A member of our extended family runs a construction firm in Western CA and they've been building suburban tract housing EVERYWHERE - from Nanaimo to Abbotsford to Edmonton. And the same kind of sprawly suburban tract housing thaat exissts in North America is a popular status symbol in India, Vietnam, Malaysia, and China to name a few. Drive around Chandigarh, Delhi NCR, HMC, or Johor sometime. Also, if talking about Europeans, it's probably good to specify which part of Europe. Milton Keynes, Amstelveen, Dublin, Aarhus, and Espoo all feel very North American suburban in style.
Yep! They also prefer suburban tract housing. Also in Ireland and UK in my experience (my coworkers in the London office all moved to Reading, MK, Newbury, etc once they started familes). Amsterdam as well after visiting another cousin in Amsteveel, and Aahrus and Espoo to meet a buddy of mine who went to Aarhus Universitet and started at Nokia
>(my coworkers in the London office all moved to Reading, MK, Newbury, etc once they started familes
This goes back a long time. The stockbroker belt/home counties as where commuters into London live has been a thing for more than a century, since railways then automobiles made this practical.
The attitude klabb3 mentioned of "Europeans don't want American suburbs" is, as I think he is realizing, nonsense. No matter where, no matter who, the majority of people prefer detached homes with lawns if they can afford them. (I speak as among the minority who prefers dense living.)
> No matter where, no matter who, the majority of people prefer detached homes with lawns if they can afford them.
Eh. Yes, people want ponies. Suburbia does indeed optimize for this parameter, but they sacrifice almost every other. Single family houses with lawns is nothing new in Europe, but most of them are rural.
I'd still defend that for the vast majority of Europeans the attraction of American suburbia is very low. Most choose to live in apartments in dense cities that are most attractive near the center. "Walkable" is a term i first heard in the US, that is quite meaningless in Europe, for a reason.
In this case, the 'wealthy foreigners' are large corporations (and foreign governments). Not the occasional gringo that decides to bridge the language barrier and buy property there.
Step 4: say "oops, we can't afford to pay you the stuff we promised, but you should have known that, because you are smart investors and you checked our balance sheet and houseflow first" and then default on the investments. I wonder why these places are so desperate not to do that.
Because the international class that sets policy - and is heavily represented on this site - would lose money if they did so. Better to focus on idpol like ingroup/outgroup blame.
The rules have changed so you can no longer qualify if you buy property at large cities. Now, you have to buy property in smaller communities. There's a special incentive if you buy an old property with the intent to restore it.
>It’s a case of saying that Portugal has been constantly for sale. If in the recent past, large public companies were sold off to Chinese managers who now do whatever they want — like Energias de Portugal (EDP), the main electricity company, which, after making an exorbitant profit in the first semester of the year, they’re now saying that energy prices are going to go up again — now are private assets which are being bought out
What a fucking disaster. Selling off national assets to foreign investment groups.
>China Three Gorges Corporation, a SOE, won in December 2011 the bidding for the Portuguese government's 21.35% interest in the company. The transaction is expected to be concluded by April 2012. As of February 2014, just under 45% of the ownership of EDP was controlled by five institutional shareholders. Amongst the others were the Qatar Investment Authority and BlackRock.
Qatar, China, BlackRock. Can't find a better bunch.
Blame neoliberal ghouls which, as the saying goes, "never let a good crisis go to waste". It was the perfect time to get public assets from the Portugese state, Greek state, Spanish state, etc, at a massive discount. A fire-sale of public goods, if you will. Also, by the way, a great time to push policies which made youth unemployment go to 30, 40, or even 50% (!), to get those sweet qualified youths to go work as nurses, doctors, engineers, in Germany, Netherlands, the UK, etc.
Blame also the eagerly colaborationist Portuguese government from 2011–2015.
> The government has taken desirable measures for foreigners, making it easier for them to get golden visas if someone invests a certain amount of money. My husband, who works in real estate, tells me countless stories of flats left uninhabited by some rich person who arrived at the building, bought two flats so that he could get a visa, and doesn’t even live there.
There are a bunch of restrictions on where and what types of properties qualify. You can no longer buy property in large cities and get the 'golden visa'.
I do not think that is the main driver in large cities. IF these price hikes are indeed driven by foreigners, it's probably other European Union residents.
> Nowadays, flats are being rented in Lisbon for four thousand euros
Yeap. Rented. So why did they bring up the visa thing? You can't qualify if you rent.
Also, housing prices have been increasing all around the globe at the same time economies are screwed up and inflation is rampant everywhere. Blaming foreigners seem... xenophobic? I didn't know Portugal was like that.
For starters, is there enough new construction to satisfy demand? If not, there's the answer.
> (...) And if Brazilians, who must be the largest source of Portuguese immigration, move here
Wait. I thought the problem was rich foreigners? There are rich people in Brazil sure, but I seriously doubt their numbers would even move the needle. The overwhelming majority of expats are _not_ millionaires. If you are that rich, you can have a pretty great quality of life and would only look to live in Portugal if you were really into Europe or something like that. Rich brazilians are more likely to want to have property in Miami.
> The Portuguese are becoming, nothing more and nothing less, the servants of big foreign millionaires
Back to the foreign millionaire thing.
Way back in 2012 I had the opportunity to live and work in Europe. I considered Portugal, but while the country is amazing and the food is good, the salaries were utterly terrible compared to the neighboring countries. It seems that things have not changed.
For example, it claims Brazillians are going to Portugal in large numbers because Bolsonaro...
Except, Brazillians are going to Portugal in large numbers, because the Portuguese government invited them, out of necessity since the country is depopulated and has low birth rates.
I am one of the Brazilians that intend to move to Portugal, and part of the reason is that I am not exactly Brazilian, yes I was born in Brazil, but my family is from Portugal, and I was raised with a Portuguese culture, I just don' t feel like Brazil is my home and want to try going back to my family hometown (Leiria) to see if it is a place that clicks with me.
Lisbon and other metropolises indeed are bad, but because a incredible amount of people want to live there despite lack of enough land there.
> Lisbon and other metropolises indeed are bad, but because a incredible amount of people want to live there despite lack of enough land there.
And infrastructure. Lisbon is incredibly dense, partly due to its historical neighborhoods that's impenetrable by modern surface traffic, and a subway network with insufficient reach for a growing metropolis, resulting in everyone packing themselves denser in the few desirable areas.
Its a global problem that interest rates have been too low for too long. Most Americans dont realize that in most countries, house prices continued to go up through the 08-10 recession, so haven't gone down since the early 90s. Property needs a big global crash.
But if it's a global problem... where are all these rich people coming from? Even if the richest 10% of the global population were going around buying three houses a piece, that would still leave 70% of the housing market left over for us plebs.
Its not rich people its middle class people with 500k mortgages that no one would take if rates were 5%. US rates have come back up, Europe is slowly started too but full impact isn't yet felt.
Thank you for mentioning interest rates. Any time housing comes up on HN, the main factors people bring up are short-term rentals, NIMBYism, and lack of new development. However, if these explanations had any merit, why have home values in Flint, MI increased by 67% since March of 2020?
Flint's population has rapidly declined over the past 40 years and continues to decline (its population is less than half of what it was at its peak), so there's not a population boom driving up demand. Flint is not exactly known as a tourist destination either. And to top off, Flint is most well known for its contaminated drinking water that contains lead. So why on Earth would such a place be experiencing a housing shortage?
The obvious answer is that governments around the world have brought interests rate down to zero, which forces investors to seek out riskier and riskier assets to invest in. Instead of investing in traditionally safe assets like treasuries and bonds, investors now have no choice but to invest in stuff like tech startups, cryptocurrencies, personal loans, mortgage-backed securities, and dilapidated houses in the Midwest.
And the biggest reason people buy housing is that its been the best investment. The wealthiest people I know are the people that bought houses a long time back and kept leveraging up into buying more.
The interest is the cause of the problem in the first place. We've known for thousands of years that usury is bad, it's prohibited in the three major religions, and for good reason.
We see it time and time again. Policy makers try to address the symptom but not the cause, then people cry when nothing gets fixed.
You might be right. I assume lending as a regular part of the economy but my grandparents lived in a world where it was very difficult, even for a mortgage. I can't see any real benefit of credit cards, payday lenders.
Actually, that is something many middle-aged Portuguese are keenly aware of. Either because they lost relatives in that war or because they are still trying to figure out how to cope with the mistakes of that generation (most people who lived through that are gone - and so are their worldviews - so I don’t see any point in demonizing the dead).
And what does some historical injustice have to do with ordinary people being pushed out of their homes? Maybe you could try to not put them all in one caste and judge them all as a single entity?
Really, it is not appropriate to wish them all suffering, because of some historical fact, which they most like did not have a hand in. A little empathy seems appropriate. Maybe with more empathy in the world, we would also see some more apologies for historical injustices.
They did a mess in Brazil too. Extracted what they could, be it wood or gold and everything in between. Gold in particular was a pretty good shakedown. We learned about all the B.S. at school.
I am Brazilian. I do not blame the current Portuguese people. Heck, I don't even blame the Portuguese back then, just their government. I want Portugal to prosper.
Asking for an official apology is fine. Blaming ordinary people who are just trying to live their lives, is not fine.
Portugal Created and give a Country to Brazilians.
Before Portuguese came it was only forest and some indian tribes fighting each other.
They literally gave a whole country for us Brazilians.
Or you really think some (maybe 80) Portuguese that came desperate, with hunger and disease after months sailing would be able to "genocide" all natives?
I know what "history" books says, but it is bulls*.
Oh please, don't bias against the portuguese people (or anyone else) for what their ancestors did. You are not being better than those who think every african american is violent and uneducated.
Central city locations in Lisbon and Porto have exploded in price, but this is due to AirBnB rather than rich expats. Portugal's tourism industry has boomed, which has put money in a lot of people's pockets, but has distorted local economies somewhat. Better management is required, for example cracking down on AirBnB and NOT building that new cruise liner terminal.
Unfortunately the upper middle class idyll (alluded to in the article) of living a dilapidated (but in a cool way) apartment ten paces from your favourite coffee shop, while doing a socially respectable play job is now no more viable here than in SF, London or Berlin. Indeed, my own favourite 'coffee shop' got turned into a chain tequila bar.
Outside the hot centres, things aren't as bad. Public transport (at least in the AML - Lisbon Metropolitan Area) is excellent by any standard, and decent apartments are available for sensible prices well within one hour public transport commute of the downtown. Compare with London, where people are fighting over each rental.
> family factor weighs a lot here
Yes, and this is a problem, given that Portugal only became democratic 48 years ago and has a large amount of cultural baggage from quite frankly medieval times. Also, the implication of this statement is that family doesn't count elsewhere - and in case you missed it it was spelled out a few lines later, which should give you an idea of the residual naivety and insularity of (old) Portuguese culture. Agency - the idea that you can do or think something independently, and then take responsibility for it - is somewhat lacking too.
But! There is much that is very good about Portugal and the Portuguese people, I feel that here it is ok to be kind to each other. Furthermore, there are good changes, new opportunities are arising (perhaps in a very small part to some of the more productive visa holders), and I see a great future for Portugal - even if many Portuguese often don't.
(Calling yourself a "refugee" as a rich immigrant is a bit off-puting, imho)
Why do you say that the rise in housing prices has been due to AirBnB but not to rich immigrants? It seems a bit odd. Both can outbid the average native and just push prices high. Many rich immigrants also buy up loads of property for speculative/investment purposes, not just to live in.
>has a large amount of cultural baggage from quite frankly medieval times
We lived in Lisbon for a year. While lots of city centers have had housing converted to Short-term Rentals, Lisbon is at an entirely different level. There, entire apartment buildings (6-10 units) are converted to Airbnbs/hotels/hostels. There are streets in the more touristy areas where every other building is for STRs (buildings that were clearly built as long-term housing).
not the op.
agree that op is not refugee fleeing war on inflatable boat.
I distilled "lack of agency" as: not rewarding initiative, people afraid to take initiative. the portuguese boss does not like the employee to take initiative, and the employee will not do so.
copying existing British designs is "safer" socially speaking, than making new designs.
source: I'm portuguese, I'm a weirdo and people always try to conform me to a box.
There is such a thing as a rich refugee. People in the mining business, when a country goes supercritical (more than Brexit, like Cuba) their bright career prospects decouple from their prospects politically, so confiscation is on the table even if "they were cool" because eg the Cuban Revolution needed money and now everyone is meant to have the same amount of sustenance anyway. New definition of what's fair. They operate under more recent definition, I would say every single person has a different definition of fairness.
Incompatible definitions of fairness. They have in practice a much higher metabolism requiring more pure ingredients, from better sources, it's medically harmful to cut them off like instantly. Although at the same time they contribute to both the problem and solution, like it depends. Turns out very rough to adapt to on short notice, flat-out can't in many cases, and for sure you can't send your kid to any random Cuban school with kids on the other side of a former class divide, from one day to the next? Like how are you going to tell that kid? Just gotta be "really cool", in the "they was cool", sense, and some kids make it and others can't, wretched childhood. Although at the same time Fidel Castro, biographically, grew up among blacks because his father didn't recognize him fully, not even a second son, so he knew it could be done and there was the will that it happen.
And people will price discriminate against that kid forever, never accept he's no longer rich unless he's filthy in rags...that's a rough sketch of it. Misery all of a sudden, and metabolically difficult, like it's not just 2000 calories here's some water with fluoride for your teeth boom done. It wouldn't take your body 24 hours a day if it took a single sentence to summarize like I just did. Water alone, Americans aren't supposed to drink Chilean water or they get diarrhea like automatically, it could be anything, selenium plus manganese in the water table, natural salts (as opposed to NaF) that are systematically removed in America. It's along the same lines as toothpastes in Chile having over 6x the sodium flouride of American toothpastes. Like literally you couldn't buy those same toothpastes in America without a dentist's prescription, I innocently told them 5000 ppm pharmacist looked at me said "No that you need a prescription" like it was opioid that kind of reaction. I was actually prescribed toothpaste weaker than the only strength toothpaste Walmart sells in Chile, it's all 1650, like eating the color white, kids hate it because it's good to hate it because it's bad for you. Counterproductive, makes people become busted and scream at their kids, everyone in the family going to the Walmart to buy cookies. Makes you crave. Gives you ADD, I actually--it turns out--don't have any symptoms of ADD--and I generally have literally every single one and nothing else--when I cut fluoride out of my life. Drank from a well. I actually paid attention, as a verb, for once in my life. Like a colorblind guy seeing blue for the first time. So weird, now I know what people are talking about.
So if you don't want F poisoning, which is exactly what the fuck that's all about for political reasons, there it is again, didn't want this country to turn into another Cuba, Socialist Sandwich as Nixon put it, you flourinate really hard. Breakfast lunch and dinner, inescapable, it's a super expensive subsidy but it's not for your teeth, it's for your brain, it is incapacitating so you don't eg sue or protest. If you know the way around here in Santiago, you'll figure out you have to pay triple at a homeopathic store, the pharmacies don't carry any toothpaste that doesn't F you 1650 ppm. Either you go way out of your way or go without toothpaste, which is a thing for instance in Cuba. Everyone has a hard time adapting to that.
>>has a large amount of cultural baggage from quite frankly medieval times
>I wonder what exactly you mean by this.
I was at a festival last night - the screens by the stage were playing ads in between the acts (that itself is a topic for another day!).
After a cringe-worthy advert for the UK (that I didn't even recognise it was so far fetched), there then appeared a public information message in Portuguese. It said (and I do my best to translate):
"What is the place for a women?"
(pause)
"Wherever she wants it to be"
Full credit to them for trying to drag themselves into the 21st century, having mostly avoided the 20th - you can see what I'm getting at.
Rich expats too, who are you trying to fool. Can rich expats outbid the average Portuguese? If the answer is yes, then there's not much discussion to have.
Others have said it before, but mass tourism is the new Dutch disease [1]. Pure tourist cities like Venice are already too affected by it to have a chance of getting back to a normal economic and social life, but there are other cities that are still trying to fight it, like Barcelona. Not sure if there are any political forces in Lisbon or Porto ready to take the same stance.
Yes exactly this. And like other resource extraction industries, tourism does not provide many high skilled jobs and is not supportive of a growing and successful middle class, favouring wealth holders over wealth creators.
Well I'm watching (from afar) the place I was born and grew up in, the place I call home, burning to the ground. All the good things we stood for - tolerance, pragmatism, good humour, reputation, confidence, common decency, are being lost. All the time the news gets worse - strikes everywhere, shortages, NHS collapsing, people will have to choose between heating and eating this winter. Portugal seems like a well run paradise in comparison.
It is a man made disaster, and I left to escape it.
Every time this topic is touched I learn something new about the standard of comfort that western Europe enjoys.
I've been told that in Germany the gas-saving measures will make people turn down their temperature during winter to 20-21°C from the, supposedly, standard 24-25°C.
But that can't be right, can it?
When I lived in Italy we had below 20°C during winter because the wooden windows from the 70s not replaced since then due to various, not strictly financial reasons, didn't provide much insulation.
Over here in eastern Europe it was always "18°C and put a sweater on".
I'd be careful with these ideas of countries being generally wealthy these days. Germany and the UK as with elsewhere has a large minority who could only dream of such temperatures in the middle of winter in their home. Many will go without heating as they have done in previous winters. Standard of comfort is highly variable within countries.
But yes, generally speaking, people have got used to setting the thermostat higher.
Portuguese living in Lisbon here -- I deeply agree with the parent comment. Prior to covid, it was very common to hear stories where families were to put all their savings into new mortgages to buy more AirBnBs.
I also see a bright future in Portugal. Many young people that moved out after university want to come back, after making a killing in their career. They might earn less with the move, but you don't need a six digit salary to live very comfortably here.
First the linked article would do with a bit of proofreading, it is painful at this point.
The market is mostly driven by portuguese government offering low taxes to people retiring in the country.
This won't be sustainable in the long run as all those people retiring now likely got less kids than the previous gen and will gonna die soon. This is a bubble that will pop in the next 20years when the amount of people dying and properties being put on sale will be much greater than people willing to retire there.
Also it is not like all these properties sold didn't benefit portuguese people.
Actually, the market is being driven by wealthy real estate owners who don’t want to do anything but sit back and rake in the profits. The government has been sponsoring visas to get investment in to diversify our industry and economics, but the people coming here to work are not really the ones buying luxury flats.
Yes, the situation is dire. I live in Lisbon as a foreigner for more than 12 years now. We pay a rent for a small flat that used to be very expensive and now is on the cheap side in our quarter of the city. Luckily, we have an older contract that cannot be changed as easily as newer ones. I'm not thrilled by the possibility that our landlord might cancel it some day, however, e.g. for relatives to move in. Rents in the city have skyrocketed, we'd have a hard time finding anything, even though we both work full-time and have salaries above average. It's crazy because all new homes and apartments are "luxury apartments" with insanely high pricing both for buying and renting. They're mostly empty or are (often illegally) rented out as holiday apartments. It's incomprehensible to me how ordinary Portuguese families survive in Lisbon. I guess most of them have inherited property.
Quite honestly, apart from the generally increasing gap between rich and the poor, one big problem in societies nowadays is that you can simply get richer and richer just from owning property. For example, if you own three ordinary apartments in Lisbon, you can live in one of them and easily make a good living by renting out the other two as holiday apartments. Because cleaning services, guys who do repairs, etc., are cheap in Portugal, this involves almost no work. Moreover, the net worth of your property will continually increase while you do (almost) nothing. I'm not saying I blame these people, I would do the same if I had the opportunity, but this is a huge structural problem in my opinion.
Nope. Zoning and licensing is in the hands of politicians and construction lobbies vying for the best places to build high-value housing, which is where they get the most return.
And those folks are voted in and supported by voters who like the fact that their homes quintuple in value. The same goes for any investment properties they buy.
Greece has the exact same problem. Rents are skyrocketing and people can't afford to live in their own cities. We're building more housing, but it doesn't seem to be helping.
Maybe SF doesn't want to build more housing, but this isn't universal.
It's probably not enough new housing is getting built. People don't even remember what a real large-scale housing spree looks like, because these last happened generations ago. These are transformative events. eg in Athens in the 1950s-1970s : https://www.bbc.com/culture/article/20191011-the-surprising-...
Indeed - in fact I live in a suburb of Lisbon that was just fields maybe 30 years ago - I am continually astonished at the vast scale of reasonable quality high density housing, all with schools, parks, hospitals etc - there must be hundreds of thousands of people here, a miracle of urban planning. Apparently the Lisbon middle classes fled to these new suburbs to get away from their small damp draughty downtown apartments, which ironically have now become so desirable.
My experience with most people saying "we are building more housing" is that they drastically overestimate how much housing is getting built, especially relative to yesteryear. If you look at net increase in units YoY, it's usually quite modest even for booming, "in-demand" areas.
The other part is that the same things that make it slower to build more housing also make it more expensive, all the various bureaucratic processes.
Time is money. The longer you spend time on a process, the longer you spend on people to just babysit, and the more inflation ticks up the cost of materials.
Also the kind of housing being built matters greatly. If cities continue to zone for single family homes, the increase to supply will not be significant.
Furthermore builders will need to be incentivized appropriately otherwise we'd get an abundance of luxury apartments (higher margins).
In my area of Germany new 3-4 room apartments(!) sell for 500-700k€. Waiting lists for parcels of land which must be allocated by the city stretch out for years. Old houses even in poor condition and needing major work start around 300k€.
This is not some metropolis or even medium city. Quite the opposite.
In what way is building more housing simple? If it were that straightforward, California (which has much more space and money) would have done it, and Californians wouldn't be moving to Portugal.
The physical building of houses and even raising the capital to buy the materials and labor to build some sort of house capable of housing people, is not anywhere near the choke point in California. Eliminate the zoning and building inspectors and associated enforcement mechanisms and the houses would pop up.
I guarantee if California said tomorrow, "build what you like on your land, there will be no permits required!" People would flock to build on the land. Whether the dangers of that outweighs the dangers of homelessness and high price families spend on rent that makes healthcare, healthy food, and education less affordable, is an exercise for the reader.
For many decades, California has had extremely restrictive building regulations, especially in the most desirable areas. That is slowly changing, but the actual building has always been straightforward. It is getting the permission to do so that is complicated, expensive, and often just impossible.
Agreed on all counts, but that doesn't make the problem of politics any less real. People problems are always the hardest to solve, especially when deeply problematic policies like Prop 13 are written into the state constitution.
That's a permissions problem, not a demand problem. If the free market would be let loose there, we'd have skyscrapers on every block. The issue is nibmy-oriented citizens who are actively resisting that.
I find it hugely frustrating, but it's not that complicated. Ever since prop 13 passed in 1978, homeowners' property tax has been pegged to the purchase price rather than the assessed value, creating a huge disincentive to sell. In a place like LA, most or all of the habitable land has been developed. The lots that are undeveloped (at least those in my neighborhood) are sketchy—steep grades and sandy soil, which will eventually crumble either due to a megastorm or earthquake. No one wants to sell to developers, and why would they? They live in nice houses that get more valuable every year, in a nice part of the country with nice weather. Beyond that, they oppose every housing development imaginable, usually by arguing that "luxury condos" are replacing "rare green spaces." (There's a whole "Save Poppy Peak" campaign near me, which is infuriating, because it's a bunch of people with $1.5 million+ houses who don't want apartments to get in the way of their view.)
There are all sorts of obvious political fixes to this (repeal prop 13, end single-family zoning, incentivize building mixed-use, mixed-income residences, whatever), but I can't imagine any passing any time soon. Homeowners have all the power, fight all these changes tooth and nail (often through lawsuits against developers on environmental protection grounds) at the local level.
Californian's have at every chance voted to make themselves landed gentry. That means low property taxes, restrictive zoning, and often just total bans on building. At a hyperlocal scale it makes sense, allowing things to be built can be bad for the homeowner next door, it just leads to the insane home prices we see now.
Historically most people didn’t live in single family homes. They lived in very crowded, multi-generational and small dwellings connected to many neighbors. Shared public spaces were used for getting together, etc. Most dwellings did not have kitchens, etc. Our idea of a home for “regular people” is radically different than what people have lived in.
People need to probably drastically limit what they think of when they think of affordable housing. Think multi-family homes where each dwelling supports 4 people and is < 800 sq-feet. 1 bathroom, 1 communal area (w/ small range + table) and 2 bedrooms.
or you could just legalize building anything other than single family dwellings. there's a lot of room in between quarter acre lot suburbia, and a crowded favela! look up "missing middle housing". the problem is purely a matter of restrictive zoning.
The cost of materials and labor is really high for most people, not to mention land. And then there’s maintenance. It’s out of reach for most people. Populations are so much larger than they were 100 years ago and people want increasingly large dwellings.
I think the tiny home concept makes sense as it’s trailers without the stigma. But yes, we probably need to think of a new type of town built around small properties that are pre-fab and disposable outside the connecting infrastructure.
No, no, no, we don't need a "new type of town" built around some pre-fab gimmick. Literally you just need to lift zoning restrictions (and related bureaucratic crap like discretionary design review) and legalize building things that are slightly-to-moderately more dense than single family home suburban houses. That doesn't mean "dense towers".
Suppose you see a man strangling himself, and he wants to know how to get out of his predicament. Does he need a VC-backed startup to sell him an anti-strangulation machine? No, he just needs to stop strangling himself! To hell with "innovation".
Land prices in the US (or the UK, or any other place with a housing crisis) are not a limiting factor, if anything they're what would fuel the construction if it were allowed to happen. Property values within cities are so inflated precisely because of the zoning which makes it impossible to build the kind of housing needed to serve the immense demand.
Housing is only “affordable” if it’s subsidized. This is because construction and maintenance are out of reach for most people. New housing stock is expensive. Even if you use cheap materials, they need to be replaced in 10 years.
So even if you build multi-family dwellings, the crisis isn’t resolved because the cost of construction, maintenance, and property taxes are out of reach. Unless it is subsidized. The UK is evidence of this. Almost all their housing is multi-family and dense and unit size is small even by European standards. But it’s expensive still. And they keep building.
Japan is a good example of a place where there isn’t a housing crisis and it’s because homes are mainly disposable and very small.
No, Japan is a good example of a place where there isn't a housing crisis because you are actually allowed to build things. They don't have strict zoning there! You can mostly build what you want to, by right!
>So even if you build multi-family dwellings, the crisis isn’t resolved because the cost of construction, maintenance, and property taxes are out of reach. Unless it is subsidized. The UK is evidence of this. Almost all their housing is multi-family and dense and unit size is small even by European standards. But it’s expensive still. And they keep building.
No, this is totally, completely wrong, the housing crisis here is not because of materials or labour costs. It is a policy failure: a sluggish, capricious planning system, entrenched NIMBYism and politicians that cave to it, massive legal restrictions on supply, and subsidies to demand. We aren't building enough, there is a massive shortfall in housing supply.
It's very technically simple. Humans have been building housing, dense housing even, for millennia. Yes, standards are higher now, but we also have technological improvements.
The challenge is nearly always political in nature: a lot of vested interests want to go out of their way to make it harder to build more housing.
> The nice thing about indoor space is that we can make pretty much as much of it as we'd like.
What? Have you ever been in Lisbon? The city is pretty dense as it is. You could mostly just build higher, and that has its limits too, depending on the structure and foundation.
Adding more housing outside the core of the city might not be attractive enough. And increasing the density of people also means you need to increase the density of services (public and private) and utilities, which also comes with its own problem.
Libson is a global city, easy air access to pretty much everywhere in europe/us/asia, good international schools, low cost of living, and very importantly, very mild, california-like weather. Once you have kids, you need access to good international schools so that they can integrate back into US public schools/colleges without getting left behind academically. Also you have access to a lot more culture and night life than out in the country. For young people the dating pool in large cities is very deep. Getting out of Libson/Porto as an expat, dating can be difficult if you're not a fluent speaker of the local language, and Portuguese is wildly different from Spanish when spoken, even though they look similar on paper.
They can build higher than that. New apartment/condo towers in Tokyo are routinely over 50 stories, and that's in a place that gets earthquakes routinely.
Yep. Gotta love even more cars and people / m2, as if traffic wasn't bad enough as it is. Some people really just think the solution is to cram more people into an already overflowing place. And please don't compare with SF or NY. Those are definitely not models. Everyone knows how shit the traffic is there. A good urban planning will limit population density by, among others, limiting height of buildings.
Yeah, Portugal should simply tear down all the old mouldy buildings of Lisbon and replace them with shiny skyscrapers, so each and every Portuguese can have their very own flat in Lisbon.
Or if they're crazy enough to want to keep these old buildings they could just build all the skycrapers in the park surrounding peak Monsanto, easy.
Historical buildings are nice, but for apartment blocks at least, yes, the priority has to be actually housing people. You can always require historical-looking facades if looks are a concern.
> You can always require historical-looking facades if looks are a concern.
I assume you have actually seen the inside of old buildings with your own eyes.
In no way is the look & feel of the inside of an old building comparable to a modern one.
Yes, old buildings sure have downsides. But pretending nobody looses anything when you only keep historical (or even just historical looking) facades is eyewash.
I bet there are ways for the Portuguese Gvt to encourage renovation of all the dilapidated old style buildings instead of encouraging speculators to wait for them to collapse so they can build new and cheap and with loosing every bit of charm a building can have.
Then it doesn’t satisfy the opposition’s requirement, and they happen to be stronger than the ones behind the “simple” solution.
They are an active party, so you can’t just say “it works, but only if these people don’t exist”. This means the “simple” solution only applies to an imaginary world, and an actual solution requires a lot more thought and adjustment to accommodate for the reality of the problem.
There is a profit incentive to increase housing prices for developers. Doing something to decrease prices will hurt their bottom line, so they just let the prices rise
Nope, that’s the ultimate illusion. Portugal is already one of the EU countries with more houses per capita. More houses means more houses for foreigners. Locals would never be able to afford them.
This is just the dark side of globalism cheered by Portuguese politics for decades. Competition is global now. Local middle class is having their lunch eaten by foreign rich people or even middle classes from wealthier countries while the unrestricted influx of emmigrants from poorer countries keep sallaries down.
> More houses means more houses for foreigners. Locals would never be able to afford them
How do you arrive to that conclusion?
- If you built 100 million new houses in Lisbon, would prices fall?
- If you built 10 million new houses in Lisbon, would prices fall?
- If you built 1 million new houses in Lisbon, would prices fall?
- If you built 100k new houses in Lisbon, would prices fall?
- If you built 10k new houses in Lisbon, would prices fall?
- If you built 1k new houses in Lisbon, would prices fall?
Even if you have a model that says that building more houses raises prices for some number of houses, surely increasing the number will eventually make prices fall, wouldn't you agree?
Where is that number? Shouldn't the discussion about how big is that number, and how to achieve building that many houses?
"Supply increses lead to price increases" is a pretty extraordinary claim, and the only charitable interpretation of it is with the addition of "up to a point". Where is that point? Why not make the charitable interpretation yourself that people recommending more housing are recommending more housing past the price increase point?
To be clear, I don't believe that the supply/price curve is anything but sloping downwards, but even if your one does have a hump, being against housing still sounds like a bad conclusion.
What works in theory doesn't work on reality. That's why I called it the ultimate illusion. With such a global demand for houses here is not feasible to increase the house supply fast enough to drop prices in a way that locals can afford them. You're just feeding the beast: globalization. The only way to tackle it is on the demand side.
Globalization is inevitable. What I don't buy is the rate of change, it _must_ be smooth or the system may implode. Blind and raw globalization is just a way to feed the nationalisms that most people are afraid of.
Interestingly, building new houses won't necessarily make prices go down, as we'll all just compete for the more desirable ones, and pay whatever we can afford to 'get ahead of the Jones'. It might mean that the quality of what we end up living in is better though as the rubbish houses get left unfilled.
Anyway, the problems is not so much that there is not enough housing, but that it is on the wrong place.
I’ve literally seen this same exact comment many, many times except with different locations. Eastern Mass, New York, Ontario, Britain, and even starting to hear it from suburban areas.
The exact same concepts: cheap grandfathered lease, hoping the landlord doesn’t cancel, can’t afford rent despite making >100k, “luxury apartments”, empty apartments, illegal renting (e.g. AirBnB) and shadiness.
Given that rental laws in Germany can't even be broken if you buy a property for your own use ("in theory" yes but in practice...) it is not surprising why the traditional rental market is the last place someone will want to have their property
Tenant protection is good, but it breaks down in high-demand situations. And of course the better solution is to solve this on the supply side
Meanwhile it is incredibly hard to build up or out in most German cities and towns due to lack of permits. Why aren't Baugenehmigungen given out? Well, landowners vote. Also, most politicians are landowners.
Lack of housing suits most people in power perfectly well. They get to control the populace through sops like the aborted rent control law Mietendeckel.
Practically every single capital is like that these days. People of all nations can copy paste same rant and it would be 100% valid. This is how it is, too much buying power with new generation of higher level office workers compared to blue collar ones, on top of financial speculation with either prices skyrocketing, or airbnbs. Let's not forget there is more and more of people in general, and more and more coming for work, education etc. to bigger places and rarely going back.
Or to put it in reverse - I am not aware of any metropolis/capital where this isn't true, regardless of regime.
More than just anchor cities. I live in a town of 60k. Cheapest homes less than fifty years old are all C$600K and sharply upward. There are many multi-million dollar properties. It is insanity.
I don't think I've ever heard the absurd levels of this blog post and I've lived in few expensive cities from italy, poland and switzerland, where it is impossible for middle class locals to live there.
Locals have a much lower income than Italy or Switzerland. Thus they are still getting priced out of cities where they have lived a long time. In Warsaw the locals are often priced out by the returning diaspora. See Lebanon, parts of Italy, Ireland in the past, etc.
Currently I think it's quite expensive (for locals). E.g. bedroom + living room costs > 3k PLN in Cracow, and probably more in Warsaw. At the same time junior dev can earn about 5-9k PLN net. My non-dev friends often are not even able to live in Cracow.
Reason how this happens worldwide may be that 70% of world population is projected to be living in big cities by next decades.
I mean, tendency is that most people want to live in the big city, sometimes as necessity (can only find a job there) sometimes as a preference (better services, etc.) the result is traffic jams and expensive real state.
I'd argue that trend is reversing, just like it did in the 1960's.
Quality of life issues eventually drive people to live in the outer suburbs, further exacerbating issues within city cores (e.g. San Francisco right now).
You can argue it all you want but the numbers don’t support it. If the demand is going down then why is it becoming more expensive?
Also, white flight in the 60s was a move to the suburbs- many would consider that given the density of 2020, the suburbs are feeling the same crunch. Bellevue and other suburbs are more expensive than Seattle. I’m guessing there are suburbs of SF that are more expensive than SF.
Prices are dropping in San Francisco, especially condos which are below pre-Covid prices now.
And you yourself said "Bellevue and other suburbs are more expensive than Seattle." Which would infer that yes, people are leaving the city and moving to suburbs.
Of course they are as interest rates are rising quickly. Nobody is talking about it, but free (or almost) money was also a good reason why prices increased that much.
It is still one of the most expensive and sought after places to live in the country, and maybe even the world. You can’t just remove all context from reality to try to make your points. You know this. Be a big boy.
Indeed, as far as I can tell (I’m in Bangkok but I’m not a local) there is a lot of choice and a super wide range of prices.
Public transit is constantly being expanded and there is so much stock of modern buildings, I can’t see it changing any time soon.
Last week I went to the fish market by Sky Train, first time I’d been out that way, and I was surprised to see a ton of modern condo towers clustered around Erawan. And why not? It’s 30-45 minutes on the train to the center of town.
It's been a few years but when I have been in Bangkok for a few months I just took my scooter around an area I liked and walked into good looking buildings asking for an apartment and had a monthly contract the same day.
Compared to months of planning and looking if you plan to move in an European city.
Came to say the exact same thing. Most in the English-speaking world have no idea cities like Tokyo exist. It’s still a global capital, still growing (for now), but it’s still very affordable for people of all economic classes. And it’s not for lack of foreign speculation; locals mostly aren’t buying up the $10M+ flats in the new Mori building, but there’s plenty of development to meet demand across the spectrum.
The underlying issue is that demand for these places has increased in our new globally-connected world. That's not going away. Cute little lake houses aren't going to be a local secret anywhere in the world, anymore, and the sooner people realize that, the sooner they can think about how to adjust to it.
We are currently in the "denial" phase. We can't get to "acceptance" fast enough.
I think the wealthy are already well beyond the denial phase and that is part of the problem. There might be a global panicked landgrab being undertaken by those who control large amounts of capital. Because if they dont, someone else will.
The problem isn’t a lack of “cute little lake houses”. The problem are is a lack of “affordable homes”. Or any home.
And adjusting to what exactly? Living in squalor way outside of what you call home because some parasite gets to live in a furnished and unaffordable temp home, payed for by a relocation package?
If you care at all about convincing others of this point, I think you should know that when you use words like “parasite” to describe people engaging in ordinary economic activity my eyes roll back in my head and I don’t hear anything else you have to say.
The underlying issue is wealth inequality. There's a glut of capital chasing returns internationally that grows bigger every year.
If 10 people with $1 to spend on an apple, and one person suddenly had $11 you could say demand for apples had "doubled", implying that this the result of an implacable, impersonal, unchangeable force but it absolutely isnt.
This is a bit of a shell game. What you describe is just another way to say that demand has increased. And your reframing doesn’t help us much, because there’s nothing in the short term you’re going to do to drastically change the global inequality landscape. So if we accept your explanation we’re actually worse off than where we started.
I reframed it in such a way to make it abundantly clear that the problem can be solved at any point with the judicious application of new taxes.
That guy with $11 just needs to lose most of it or not be able to spend it and then there is no more apples shortage "due to high demand".
Portugal cant tax an overly rich canadian living in canada but they can absolutely cut the bottom out of the portuguese-property-market-as-a-bitcoin-like-store-of-wealth. This would not only free up land for portuguese habitation it would help fill the portuguese budget hole.
However, for some reason that is probably more about a variety of property owning portuguese politicians getting very rich and not attracting useful investment, the Portuguese government encouraged this with the golden visa. They only cut porto and lisbon out of the program after a steep backlash.
Many dislike the idea, but this is why people turn to "nationalism".
If you want to decrease unemployment, you add tariffs for imports enabling more businesses to open domestically (i.e. tariffs effectively increase import costs).
Similarly, you can loosen building codes to increase production of homes, limit visa duration, require citizenship for home ownership, etc. Those are some obvious fixes, why is the government not doing it?
Beyond the obvious potential fixes, all EU countries are facing the same issue:
- supporting immigrants (high level of immigration)
- no controls over ones border(s) (anyone can move between EU countries)
- over regulation and too many social programs (reducing peoples willingness to work & increasing burden on the current tax base)
- over regulation of industry and farming has left the only option to survive being to work in a city (as an example, see nitrogen reduction regulations in the Netherlands)
It's all "give-and-take" you have to decide how you want to live... To me it sounds like the EU is hitting a critical state, but is there a will to make the tough calls yet?
Basically all of what you said is empty populist propaganda that doesn't pass a basic sniff test. You're painting the EU as the bad guy with a broad brush and it's just total nonsense.
* depends on how you define "high" levels of migration, but few EU countries fit that. Portugal does, because they explicitly encourage it. Why? Nothing to do with the EU, they're trying to fight negative population growth.
* social programs aren't an EU thing, they're purely local. And the "too much social spending makes people not want to work" ia such bullshit.
* there are more local regulations than EU regulations. Which ones specifically are you referring to as too much?
* farming is explicitly subsidised to make it profitable. What are you talking about?
* not everyone can move between EU countries, you need to be a citizen. Like the Portuguese that have moved all around (e.g. there are probably millions of people of Portuguese descent in France)
It's annoying how popular empty nationalistic populists have gotten. Can't nobody bother to fact check their bullshit?
Nationalist populists really have never bothered with facts. People fact-check, but that's too late - the message is out, and it makes people feel better about themselves. That's all that matters. Truth doesn't enter.
(We could now add the Satre quote, or Hannah Arendt, or any number of people who've written about this. The popularity of the feel-good lie is well-inspected.)
Yeah, facts. Demographics explains most of what's going on.
Portugal's working age population is declining[1] while its 60-plus population is increasing.[2]
Old people own most of the real estate and don't care much about workers. They also tend not to like change, which immigrants bring. So they dislike immigrants despite depending on them.
(//TODO: find papers supporting these assertions: they're factoids of the "everyone knows" type.)
"Boomers don't like immigrants/workers, therefore life is getting really expensive" doesn't really sound like good reasoning.
If the population is shrinking, demographics doesn't explain it by itself. Housing should be getting cheaper if there are less people competing for it. There must be another factor here.
As with all wealthy countries, household size has fallen in Portugal over the past few decades, so the same amount of people needs more house. This is especially true in the context of empty nest retirees.
So that could be one of the extra factors that we're looking for. People want/expect more, which has caused people to have to pay more. But I'm doubtful that it is going to account for a lot of the cost of living issue in Portugal.
I'd still like the GP to connect the dots for me on his "it's all demographics" argument. It sounds like are argument you hear on Reddit.
For example, when my siblings were kids we all lived in 1 house. I have 3 siblings so there were 6 of us including my parents. In 1 house.
As we graduated from college we moved out. Now there were 6 of us in 5 houses.
Beyond the raw house count, you're going to need more space. Multi-bedroom homes have shared common space. The house we grew up in had 1 dining room, 1 kitchen, 1 living room, 4 bedrooms, and 2 bathrooms.
If we each moved out on our own, we now needed a minimum of 5 dining rooms, 5 kitchens, 5 living rooms, 5 bedrooms, and 5 bathrooms.
The number of people is the same. Still just 6. But we needed more housing and more space since we didn't share common space anymore. We didn't expect more than we had before (well, beyond the practicalities - it's difficult to share a bathroom with someone you don't live with), we expected the same as we had before we moved out.
You don't need a dinning room. That's a luxury feature.
It is possible to share bathrooms if you build housing more like school dooms or single room occupancy.
Having a place to eat at home is not a luxury feature, unless the city has a population density that is high enough to support having a broad array of dining options that are open for most of the day. Tokyo is one example of such a city, but having restaurants that are open 24x7 is not common at all in Europe.
Growing up (middle-class; both parents were teachers), we used our dining room to eat maybe 3 times a year. We ate around 1000 meals/year at the kitchen table and maybe 3 at the dining room table.
Most younger people share accommodations (e.g. have a roommate). Most older people share accommodations (e.g. have a family). There is also some, for the lack of a more sensitive word, attrition as time goes on. Yes, your family has grown and the amount of space your family needs in order to maintain their quality of life has increased. Yet it has only increased by a relatively small amount.
I am also going to echo what was said earlier: dining rooms are not a necessity. They are mainly intended for people who entertain guests. Many apartments and smaller family homes don't even include a dining room, since the expectation is that people will eat in the kitchen.
Housing supply doesn’t grow by all that much though, so a “relatively small amount” is enough to tighten a market.
In any case, censuses define a household as people living together in a unit, which would account for roommates. Portugal has gone from 3.7 in 1960 to 2.6 in 2011. Housing 10.3M people at 3.7 requires 2.8m units; 2.6 requires 4m units. And that may be just what Portuguese people have to put up with, but not their desired end state; if they were at the EU average of 2.2, then it would require 4.6m units.
I think that your thrust was that smaller average household sizes means more dwellings are required. This is a good point.
Shrinking average household sizes could be explained by the shrinking size of the average family, or it could be explained by shifting expectations, by people wanting more.
If you take a population where all single people are willing to live in share houses, your average size of your household goes up. If all the single people expect to live in their own apartment because they want their own space, own bathroom/kitchen, then this would drive down the average household size.
I would expect both of these dynamics to be at play here. Average family sizes are decreasing in most developed countries. People's expectations have also risen with regards to housing.
I wonder what effect each has on the demand for housing in Portugal?
BTW: Your personal example is possibly a good example of shifting expectations in society, whether you recognise it or not. Every sibling moved into a place by themselves? Did no one move into a sharehouse? I probably do not live in the same country as you, but it used to be in my country that when you first move out of home it is not the norm to live by yourself. What's the norm these days?
People definitely want to live by themselves even if they cannot afford to, and other things also factor into it.
(Disclaimer, I'm American, so can't speak directly about the Portuguese experience.) But as an example, at this point I don't remember the last time I saw a bunk bed in a non-dorm room setting. This used to be extremely common in low-income housing in particular [1] but as an example I have never, ever seen anyone share a bunk bed with a stranger.
One other effect is location, location, location. In Lisbon in particular, like most European cities there is generally a height limit imposed on most of the city (higher than most places in the US, but not so high that tall buildings are allowed). There is only ten buildings above 80 meters in all of Portugal. If your building is so short, there is only going to be so many ways to subdivide it before you can't split it more to accommodate people.
Besides what bcrosby says, old people hold on to real estate "as an investment". In many cases they actively prefer that it be unoccupied, because occupants complain and want repairs done, and so on.
Or, in the case of "world cities" like London, wealthy (nearly all old) people from shaky and shady regimes around the world buy them as places to escape to if need be.
As well as falling household size in occupied dwellings, the proportion of unoccupied dwellings in these cities increases far above the percentage normal for the delays inherent in ordinary buying and selling.
IIRC Paris is attempting to combat this with a surtax on dwellings unoccupied for long periods.
"Boomers don't like immigrants/workers, therefore life is getting really expensive" mischaracterises my argument. In hindsight I should have left out superfluous phrases.
The fully elaborated argument is long and somewhat nuanced. If you want a soundbite, how's this: "Boomers own all the stuff (to a first approximation). Two other things: first, due to their wealth they can outbid Zoomers for real estate as it comes onto the market. (Having someone live in the proprty is entirely optional.) Second, boomers are adept at protecting their wealth by keeping real estate scarce and taxes on real estate negligible, as they have always been."
Or: people are not competing for houses, piles of money are. The bigger piles are winning.
Edit to add: Demographics comes into it because the Boomers are the first generation in history to be so economically significant in their old age.
Before the boomers, life expectancy was about the same as retirement age, or younger. Houses passed on to the next generation much sooner in their life cycle, often as they were just starting to have children of their own. Now, children can themselves be retired before parents die and leave them the house. Often, perhaps usually, are, these days.
The market weakness of new-household-forming adults (the 18-49 age group) is one consequence.
We are in uncharted territory, demographically, this century.
Isn't it weird that we allow home/land ownership to a family/individual in perpetuity and then complain about high prices and scarcity for newcomers?
Just think about it for a second, we in the west allow people to buy a piece of the Planet Earth, and hold on to it forever, virtually tax free(in Western Europe at least).
How is this nothing else but blatant feudalism? And how is it still allowed? Royal families and landlords were beheaded in the past by angry mobs over abusing this system for their personal gain.
Why don't we have taxes or a system in place to prevent this accumulation of land by those who got in the game early? Why can't we just lease land instead of allowing land ownership in perpetuity? Like, "this land is leased to you/your family for the next 100 years, after that it goes on to the market again where your offspring will have the chance to lease it again if they wish at the future market rate". Something like that, as our current system is basically a zero sum game which just encourages land hoarding through inheritance.
Those who's families go cheap land for peanuts ~100 years ago, are now leveraged to acquire even more of it while those born now without family wealth have no leverage to buy anything. Insane!
Imagine you have to start paying Monopoly from square one, while others get to continue where their parents left off. How is this fair? Why don't we have a system that resets this real-estate monopoly board every generation or so?
With our current ways, instead of creating a system that rewards individuals through hard work and innovation that contribute to society and human-kind, we're creating a system that encourages asset hoarding and rent-seeking that contribute nothing to humanity, rapidly going back to feudalism, where a few landlords, both corporate and private, will own all of the available land, and most of the people will be serfs for life, without the chance of ever owning anything, no matter how hard they work.
So, again, why do we allow people to own pieces of Planet Earth in perpetuity, virtually tax free?
>How is this nothing else but blatant feudalism? And how is it still allowed
Because the moment anyone mentions this, they get bombarded with "think of the poor old people who sit on a big house! They worked hard for it!"
We as a society have a tendency to prefer leaving lucky people as is while the remainder fights for the scraps. Why this is, no clue. Beyond voting being in favor of those already owning homes (too fractured to oppose grandfathering politically), I come across this attitude among the young way too often. It doesn't take a genius to realize sharing less with more will cause people to go hungry eventually.
Those same young people are all pro-grandfathering until they realize the bottleneck bites their life goals at age 30 and beyond. By then its too late, many of them stop caring as they become part of homeowners, and the cycle continues.
> we in the west allow people to buy a piece of the Planet Earth, and hold on to it forever, virtually tax free(in Western Europe at least)
What do you mean tax free? There are inheritance taxes for that, which often go up to 50-60% of the value for higher values. That's why the majority of castles in the UK are in trusts and open to the public, paying 50% of the value of the castle and land every generation was too much.
50% inheritance taxes are very rare in Europe, for normal homeowners it's mostly negligible, and there are workarounds like donating your property to your kids before you die to avoid the inheritance process and taxes.
And the property taxes are mostly grandfathered to the price the property was last purchased at, rather than at the current market prices.
I don't know for which parts of Europe you base your knowledge on, but in France both are wrong
> like donating your property to your kids before you die to avoid the inheritance process and taxes.
Donation to family members (above a certain sum, but any property would qualify) is taxed just like any other income.
> And the property taxes are mostly grandfathered to the price the property was last purchased at, rather than at the current market prices.
Property taxes are set at the current market prices (and if the gov thinks the value is set too low, they will come back and ask for more, retroactively).
> Basically all of what you said is empty populist propaganda that doesn't pass a basic sniff test. You're painting the EU as the bad guy with a broad brush and it's just total nonsense.
It's fascinating how subjective dimensions of reality have the appearance of being objective, and how this seems to be increasing over time.
> "Portugal's unemployment rate is at 5.7%, near a record low.
Employers' confederations have been asking for the immigration rules to be streamlined, pointing to an economic situation close to full employment"
The narrative of unemployment in Portugal driving dissatisfaction across the population is very tenuous in light of these latest developments and policies
>Employers' confederations have been asking for the immigration rules to be streamlined, pointing to an economic situation close to full employment"
They just to lower the wages. Hence why they are so in favor of opening the borders and human traffic situations like we had in Odemira with people from Nepal and neighboring countries living like literal slaves.
Even with visa deals for Portuguese speaking countries like Brasil, Angola and Mozambique just have that goal in mind, because it's not like we are getting scientists, doctors and engineers from those places...
> If you want to decrease unemployment, you add tariffs for imports enabling more businesses to open domestically (i.e. tariffs effectively increase import costs).
Unless your domestic business requires imported goods to run its business. Then you've just increased costs for your domestic industry.
none of those things gets rid of the root causes: too much financialization and speculation
alot of these things used to be regulated, discouraged or prohibited, but with deregulation of much of finance more and more wealth is generated from speculation, rents and leverage... if people can make money passively from doing nothing but owning something (real or virtual) there is less motivation for "real productive work" and squeezes out the rest of the economy.
this compounds over time and get the results you see today: high land costs, rents, inflation etc.
blocking immigration or adding tariffs etc will do nothing to stop any that....
The only real way to fight this is oversupply imho. Can't financialize something that doesn't generate outsized returns. If expected returns are lower (and risk higher) than the next financial class, money will move to that other financial class instead. Right now, real estate is low risk/high reward compared to the next best option (stocks?). So...money pours into real estate. Increase that supply to the point where finding a renter is at least marginally challenging, and you'll find that cash goes elsewhere.
Oh but yes you can financialize. Financializatuon of real estate isn't really about outsized returns, it's the return to risk ratio that has potential for massive leverage.
So if you increase supply and then people get bigger homes, etc..., until prices reach an equilibrium, then as long as rents exceed maintenance costs and land doesn't depreciate, you have a leverage (read: financialization) opportunity.
Then prices rise again until you do something else, and eventually you approach infrastructure scaling limits.
I think the housing crises has caused a lot of it. I am trying to have kids in my mid 30s, in large part because it took that long until I was financially stable. I can't even imagine what it must be like for a non software engineer.
Maybe a lower population -> lower housing prices -> easier to start a family will cause some sort of equilibrium.
That's not how real estate pricing works in the real world capitalism. Germany's population has been on decline for ~30 years due to demographics, yet housing has been getting more and more expensive, far outpacing wage growth in the last few decades, especially after the QE bull run from ~2013, so much so that owning your home is impossible for the average German.
Why is that you wonder? That's not how free market economy should work right? If now there is less demand for a good due to population shrinkage, then prices should come down right?
Well, that's because housing is not a good, it's a speculative investment asset, so as soon as people die and are not replaced, their free houses don't magically end up in the hands of those who would need them the most to buy at a discount, but end up on the "free market" being bough by existing rich home owners, investors, speculators and publicly listed real-estate conglomerates, using their existing assets and capital as leverage to buy even more houses for their investment portfolio. And governments and banks have ensure the policies to make sure this asset keeps going up, up, up.
When housing is an investment vehicle, then it can never be affordable, regardless of the population decline.
Like a commenter above said, which explains why home prices are not coming down despite population shrinkage: "people are not competing for houses, piles of money are. The bigger piles are winning."
> Germany's population has been on decline for ~30 years due to demographics
The thing is – within that time frame it hasn't, actually. There have been some years with slight decreases, but those have been balanced by other years with increases, and compared to 1990 population is actually definitively slightly up (83.2 millions last year vs. 79.8 millions). Combined with a decreasing average household size (2.27 in 1991 vs 1.99 in 2019) and internal migration those things by themselves will probably generate enough pressure on the housing markets in and around the prospering parts of the country, even without any added financial shenanigans on top.
As you rightly say real estate is treated more as an investment, so those who have bought in will never sell for a price lesser than what they bought in for. Hence real estate prices will never crash, unless something disastrous or apocalyptic happens to that country/area.
Then implement a bunch if them. Pornography is know to decrease drive. There are tax benefits that can make things happen as well. The desire to get it done just needs to emerge.
Europeans aren't having kids because they aren't having sex drive. They are having sex, just with protection, as they don't want kids, because the job and housing markets are too fucked to support a family without massive stress and anxiety for the parents.
Fix those first so we can have a stable income and affordable housing from a young age, and then we'll take off the condoms.
Because no western country has tried lowering housing costs yet. And I mean actually lowering housing costs, not just talking about it on TV, posturing, political promises or making stupid mistakes like rent-freezes and such.
But blaming the poor young people priced out of their own country for not breeding, and just bringing third world immigrants with no living standards, is much easier than improving the living standards of your own population.
As long as you treat housing like a speculative investment that is squeezing the young to get a much larger return for the older owners, instead of treating it like shelter and a basic necessity for any family, why are you surprised young people don't breed anymore? The precarious job market isn't doing them any favors either.
Mass migration that puts more pressure on affordable housing and on the low-end jobs market is not the solution here. That breeds long term instability, segregation, distrust, and leads to political extremism. The solution is fixing housing, which nobody actually wants to do, because "housing prices must go UP", and the ruling asset owning class is making a killing from it.
Its not just lowering housing costs. Raising a child does not just include housing cost, it also includes a ton of other costs, and since families have become nuclear and both parents work, it is hard to birth more children since cost/time that you need to spend on child rearing will be more. What is the solution to this? No idea
Yeah, take it further. Allow single-income households to prosper and be able to afford homes & children. Watch one-parent from each household start flocking to stay at home, maintaining a well-functioning household that's not dependent on external "services", and then having a bunch more than 1.5 kids is a possibility and probably a very appealing thought versus what it is now.
The Nordic countries have the best social safety nets in the world and their native birthrate is still dismal. What short of significant financial incentives would you do? The correlation is women's right to control their reproductive timing and access to the highest levels of the workforce. In almost every country where women aren't second class citizens, birth rate plummets.
Yeah and why is that? Is it because the young are now competing in a zero-sum capitalism squid-game economy, where good jobs are scarce and super stressful to get, requiring you to grind away the most fertile years of your life, and that lawmakers, banks, speculators, foreign buyers and NIMBY boomers have made owning a family home completely unaffordable for the young in most cities with jobs, giving young people too much anxiety about starting a family?
No, it must be porn, hookup dating apps, and all that damn avocado toast to blame. /s
>It has to allow immigration for its survival.
Here's a wild idea: Instead of imposing mass migration from the third world on everyone, you first try, <inhales_deeply>, MAKING HOUSING SUPER AFFORDABLE, and watch young people breed like rabbits?
I'm from a ex-communist country and during those days population was monstrously booming, because, even though young people could not afford modern luxuries like iPhones, cars, TVs, consoles, oranges, bananas, washing machines, Adidas shoes and tracksuits, fancy cafes, they didn't have to worry about the main things that give young people anxiety about starting a family today: jobs, housing and childcare. The state would provide families with all of those necessities. I'm not saying communism is the solution, it's not, but it turns out that most humans have very simple needs in life (we're still animals at the end of the day), and as long as the need for food(jobs), safe shelter(housing) and childcare are covered, they'll solve the need for sex on their own and breed like crazy without having any modern luxuries.
So why are we surprised Europeans aren't breeding anymore when those basic needs have been intentionally made very difficult for them to get in the name of profit, and instead we push third world immigration as a the solution to replace them?
More plausible explanation - many people don't like children and want to live for themselves but in poor/developing countries they have to 'invest' into children so they will take care of parents later. In countries with more or less stable economy people can rely on own investments or state pensions to not face extreme poverty after retirement.
Maybe people want to live for themselves because having children in the current economy is too exhausting? I'm pretty sure that if people could more easily afford everything what's required for having children they would be more willing to have them. Sure, some people still don't want to have a responsibility but I think plenty of people want children but just can't afford them.
> Many dislike the idea, but this is why people turn to "nationalism".
I have to call Grade-A bullshit on your comment.
At best, nationalist political movements take advantage of sticking points with their highly opportunistic, ideologically incoherent and empty promises hoping to buy arguments while pinning the blame of everything on whoever is the incumbent at the time.
The problem is not immigrants, of people freely crossing borders -- the problem is rich people and the power we give them. Which is pretty clear from the OP, they know what's up. Most immigrants in the world, of course, are not rich. Blaming other people who are struggling as much or more than you, instead of the people profiting of it all, is helpful for the people profiting off it all.
You're right that any negative trends foster radical views such as nationalism and communism. However, the arguments you mention wouldn't work in Portugal.
Portugal used to even have a negative net migration rate and suffers a labor shortage. Right now, the net migration rate is positive and low at around 0.5. That's a good trend, but there is still too much emigration of skilled Portuguese people due to weak economy and structural problems.
The problem is not immigration, the problem is that wealth is distributed very unevenly. Average salaries are low in Portugal, many people have to do with very low salaries and few people in Lisbon and Porto make a lot of money. Although it luckily went down from nearly 0.4, the Gini index in Portugal is still relatively high for a Western European country at 0.33. This wealth disparity in combination with laws and politics that favor landlords, property speculation, and building hotels instead of apartment buildings lead to the housing crisis.
>>> If you want to decrease unemployment, you add tariffs for imports enabling more businesses to open domestically (i.e. tariffs effectively increase import costs).
This is very simplistic. You first start building local expertise/domestic businesses and then increase tariffs to wean off imports. Don't put the cart before the horse.
You do have the opportunity though. I bet you could find, say, 10 likeminded people and pool your resources and get those 2 apartments. Yes, you only get 1/10th of the cut, but if it really is easy money like that, then why not do it?
This seems to be a problem everywhere around the world in big cities.
What’s propping all of these property prices up? Supply and demand rules don’t seem to apply at all. You might have thousands of empty apartments in a city yet the price only keeps going up.
Everything is broken, but housing is particularly broken.
Via the process of federal-reserve style banks, mostly. They are allowed to create money. They don't lend out money of the depositors. They create it out of thin air by the authority of the government who has allocated these banks a special position, thus making these banks unfathomably wealthy. Unbelievably corrupt.
I've been thinking about this I think it is the end result of globalization. First we could ship stuff overseas, then we could ship jobs overseas, now people are realizing they can ship their house overseas, and Portugal has a much nicer climate and weather than Shanghai so why not move there. Basically with the advent of the internet and the rise in remote work there's no more reason people really feel tied to a place, so in the most desirable places in the world you are no longer just competing against the people in your state or country, that real estate is now on the global market against 7 billion other people.
Feels that way too. America’s increasingly tough stance on exports to China are a sign of things to come.
I’m not even sure if this Globalization was worth all that much. It’s made some people very wealthy, some people well-off, but its also made lots of people very poor and very angry.
I’m okay with living in a world with fewer millionaires but also fewer people sleeping on the streets.
Actually I listened to an interesting talk yesterday by Peter Zeihan, just discovered he has some interesting ideas. One of his theories is that the reason we have globalization isn't economic but it was rather America's attempt to win and keep allies during the cold war. You could participate in a global world trade network and economy (kept safe and maintained by American military might) as long as you were willing to work within the US framework. After the end of the Cold War the original purpose for globalization has disappeared and now we have to figure out what is next.
It was an interesting argument that globalization was an American security development not an international economic development.
Globalization made every good much, much cheaper. Yes, it made some people rich, and some people lost their job, but everyone benefited from either the cheap goods or better job opportunities.
In Rome, Italy, we have an estimated 150k empty apartments in a 2.9 millions people city...that we know of..yet they build and build and prices keep going up.
I live in another EU country, that in 5 years I could easily see being as this article describes Portugal. I'm not sure if it's the same in Portugal, but this is only really accurate for major cities in my country.
Smaller cities and towns are cheap. I've seen government auctions selling apartments for under €5000 which nobody wants. Why? Because people are moving to larger cities. People want opportunities, and the idea of working in some chicken factory (which may have been a perfectly respected career for our parents) is not appealing for the current generation. And the problem in these small towns, is the chicken factory is really the only career prospect you have, so people move elsewhere.
Of course there are rich foreigners buying apartments as investments and renting them on Airbnb, but that's a very small percentage of the housing market. And even if they rented them normally, they'd still be asking for prices that are unaffordable for the average person. I know that because that was me, I emigrated here and bought a luxury apartment and lived in it for 7 years (paying taxes) and now want to rent it out as I moved outside the city.
Unless I rent or sell it for much lower than the market rate, even on the lower end it's still too expensive for the average person. If I sell it, it's probably just going to be poached by someone who will use it as an investment and put it on Airbnb.
My city is building a lot of new developments, but space is limited as young people want to live close to the city center, not somewhere 30 minutes drive away. That is driving up the average price, so you end up with studio apartments costing upwards of €4000/m2, which you need to earn at least €2500/mo to afford, which is well above the average salary. With rising inflation the problem isn't so much people can't afford the mortgage payments (which are slightly lower than renting), but they can't afford to save the 15% needed for a deposit.
Killer drones and airborne attack lasers for hire will counter that, partially, same as mounted cavalry put down starving peasant rebellions in the middle ages.
Airbnb and uber for all their benefits have taken away a lot of urban planning capabilities of local govts. At the same time, they expose the general unwillingness of local govts to accomodate the need of the population or those who bring in economic value (tourists, transplants).
If you are becoming a tourist hub, then create an off-town tourist area and add a convenient transit line/people mover to the central parts of town. Tourists get reasonable housing, locals don't get displaced and the influx of population does not destroy the cultural vibe of your town.
Prohibition never works, and piracy is a reflection of an unmet need. Banning things merely airs out open wounds, and leads to grey-markets such as shady uber/airbnb equivalents within the city. If you want to reduce abortions, banning merely leads to riskier abortions. Examples of this are dime a dozen.
When demand arrives, the cities MUST adjust to incoming demand. Couple examples of working uncomfortable compromises are: 1. Paris - Choose a small district and allow it to go full skyscraper. The rest of the town maintains its architectural identity. 2. Barcelona - Go full superblock. Means that tourist activity gets neatly distributed across the city (removing bottlenecks) and tourists do not lead to increase in car traffic.
I could go on and on, but 1 fundamental truth stays. Bottlenecks only help those who control access to it. The key is to eliminate the bottleneck (more housing). Band-aids (rent-control) or equitable distribution of bottleneck gains (no-renters->only-homeowners/ more single-family-housing) never works. It only leads to the situation festering (see Bay Area / SF), and makes for an even harder problem in the future.
I'm not sure if my comment conveys any cohesive point, but I hope folks get something out of it.
The compromise Barcelona made is not enough. Sadly, that beautiful city is IMHO the prototypical case of getting ruined by too much tourism.
In their defense, I think it's safe to state all mid-to-large cities in EU are quite crowded and unaffordable. For example, Copenhagen used to be a place where citizens enjoyed great purchasing power. Despite rent control and sale taxes, a single person in a well-paying job can hardly afford a mortgage for a decent flat right now. The same can be said of Munich, Madrid, London and many, many other places.
not only that. rent control also causes less properties to be for rent. if its not making enough money renting my property with bother? ill just keep it empty until price climbs and ill sell it. in paris they pushed rent control + they forbid you to rent your appartement is the apartment is not energy efficient enough. guess what? people that should renovate for becoming energy efficient have no real incentive to do it because anyway renovating an apartment will not allow them to rent it at higher price. they'll just hold onto it or sell it.
Not all additional tourist revenue is worth the marginal costs. And cities have no obligation to host visitors they don’t want.
Hotels are usually limited because they are unpleasant neighbors for actual residents. It’s not really a surprise that’s the main issue people have with AirBnB rentals.
> Prohibition never works, and piracy is a reflection of an unmet need. Banning things merely airs out open wounds, and leads to grey-markets such as shady uber/airbnb equivalents within the city.
What do you mean by "works"? Yes, grey markets will pop up, but if Portugal banned AirBnB style renting that the market for that housing wouldn't shrink?
It seems to me that prohibition might be a useful tool in a more comprehensive set of policies to address the problem.
The thing is... it's not actually. If you made a law to force AirBnB to share data on who is making the listing with the government, you have your register of who to tax/etc.
You could also make laws to limit the number of properties per person, and if you're even smarter, you could use that in conjunction with a map of relationships between people, so you could limit the number of people putting listings in their family members names to get around any limitations.
> If you made a law to force AirBnB to share data on who is making the listing with the government, you have your register of who to tax/etc.
Airbnb will probably follow your law, but other platforms that do not will flourish. They will be difficult to regulate, given that they won't be in your jurisdiction.
> You could also make laws to limit the number of properties per person.
Many laws already exist that give unfavourable tax treatment to second and subsequent properties. They are widely avoided through family members and legal entity structures and a hand-wavy "map of relationships between people" isn't going to magically fix that. This would also have a fairly obvious negative effect: it would artificially limit supply in the rental market, driving up prices. A person who could have invested in multiple properties and supplied them to the rental market will instead supply at most one, and invest the rest of their money elsewhere.
There isn't some nefarious conspiracy preventing effective regulation in this area. It's just a legitimately hard problem.
Well, it doesn't help that many inspectors actually have to use public transports and be paid later from their travel expenses, so their control area is anyway minimal.
At least that is how remember how bad it used to be.
A good decade ago, it was crowded in the tourism months (summer), but not too bad. Now it's crowded in the off season too, and during the summer months even more so, to the point where walking around is really hard.
The mayor seems to constantly want to get rid of cannabis, which won't solve the problem, the issue isn't the weed tourism... it's the unfettered tourism.
These things can be controlled, you can control how much tourists you have by limiting the amount of hotels you have in your city. But with AirBnB you lose all control on how many tourists.
AirBnB already is limited in Amsterdam:
"According to Dutch regulations, you can only rent out your entire home in Amsterdam for a maximum of 30 nights per year, unless you have a specific permit that allows you to rent out your home for more nights, such as a short term stay license."
But still the problems are not solved, it is not only airbnb, like many places we are in the endgame of neoliberalism which is the wholesale of other peoples property to rich people by the corrupt political class.
Lived in Amsterdam a few years back, the AirBNBs made it freaking torture during summer.
The old wooden buildings where one could hear everything, people arriving and talking loudly in the stairwells then banging their suitcases up the stairs etc.
I feel your pain, it's definitely a big problem in many places in Europe. Bad construction + overcrowded = Noisy.
That said I grew up in a concrete high-rise 'high density' building in Eastern Europe, and I can't recall that I ever heard any neighbor.
I'm generally a YIMBY and in favor of housing, but are we really so sure that new housing will solve the problems in cities like Barcelona or Lisbon (where tourists and people coming in attracted by the good quality of life generally have higher disposable incomes than most locals).
If you just add housing, isn't it possible that the effect is like adding roads to prevent traffic congestion? The number of people coming in just increases even more until the marginal attractiveness is the same. From the point of view of locals this means that there are even more outsiders, and the affordability is just as bad.
Sure, but why on earth would any tourist choose to stay at some off site tourist hub? The whole point of visiting a historic city like say Lisbon, is that you get the stay in an historic city, not some modern off site tourist hub where you get to take a crammed full tourist bus to the centre..
Or would you propose strict accompanying zoning laws with strict enforcement? I think that would meet stiff resistance from property owners but would be feasible. I do think all of this would make the destination much less attractive to visit though so it really comes down to how much you want/need the tourists.
In Bucharest, the city started cracking on AirBNB, the problem is that the landlords are greedy and will risk legal action to get that sweet foreigner money. Not sure how much we can blame the local governments on this one.
> or example, if you own three ordinary apartments in Lisbon, you can live in one of them and easily make a good living by renting out the other two as holiday apartments. Because cleaning services, guys who do repairs, etc., are cheap in Portugal, this involves almost no work. Moreover, the net worth of your property will continually increase while you do (almost) nothing.
I'm a bit conflicted on this. I definitely see what you're saying (and often repeat it myself).
But it should be noted: property is simply an asset like any other. If there's easy and outsized returns to be had, the demand for this asset would increase, pushing up the price to the point that the returns on the asset are in line with returns of other assets which have similar risk/effort profiles.
To say that one can make money 'doing nothing' owning any asset (that has a positive return) is true. But that's not per se some kind of economic or political problem, it's a normal feature.
Of course to absolutely do nothing and still earn enough to live off of, means you must have earned enough money to purchase a large amount of assets. Supposing rental income of 5%, and supposing rent is 25% of someone's wages, and supposing a 20% tax rate on your returns, you'd essentially need to purchase assets worth 100 times what someone spends on rent.
(ex: if you need 40k to live on, spend 25% or 10k on rent, you'd need 100x that or 1 million returning a 5% return that's taxed 20%, leaving 40k in net income.)
Amassing 100x your rent is no easy feat, and in fact it means that someway, somehow, you've provided 100x your rent in value, without spending a penny of it, and saved it all, then poured it into an asset (incurring risk and requiring some level of commercial effort), and then, yes, you could start to approach doing 'nothing'.
For many that's a life's worth of work. Buying such assets is really no different from putting in an equivalent amount of money into a retirement fund, and that fund in turn buying assets like companies. Whether it's companies that buy and rent out cars, or real estate, or produce and sell, the people owning these enterprises through their retirement fund are 'doing nothing' while others are working.
But the important part to note is that anyone has access to this system. Every person can, proportionate to their income (based on their economic value to society) buy assets.
In fact, I'm able with a click of the button not to just buy a part of a in Portugal, but rather the biggest and most successful company on the planet: Apple. I can buy a small part in it, and profit when many of the planet's smartest and most educated people build & sell some of the most cutting edge consumer technology day in day out. Whilst doing: nothing.
So I don't really see a structural problem with this system. What is problematic is the stuff around it. For example, in some countries real estate goes untaxed and is subsidised, and is bailed out when things go bad. Subsidised private profits, and socialised public losses. It's unfair and a failure of markets and governance. Another example is that swathes of people indeed inherit value to the point they've never done any contribution to the world to get into a position to 'do nothing', rather than work to retire off of the fruits of their labour, they could in effect retire from work before ever even starting. This is where the system breaks down and must be balanced, again by e.g. taxing inheritance and balancing things out.
Finally, markets work when price & profit signals can balance supply & demand. If there is a shortage of bread, demand outpaces supply, the price rises, and overnight new bakeries will pop up bringing down the price. In real estate high prices often do not trigger new supply in many countries, either due to geographical limitations (e.g. the mountains of Taiwan limiting buildable space, or simply the fact physically t...
> But it should be noted: property is simply an asset like any other
> So I don't really see a structural problem with this system.
This is the disconnect. Residential real estate is fundamentally different than owning stock, in that people need a place to live and building residential construction is much more difficult than issuing stock. When wealthy people from abroad buy multiple apartment buildings in desirable cities, and then proceed to keep living elsewhere (probably in a different residence in another desirable city) they create a problem that in no way resembles the result of buying stock in a company.
> When wealthy people from abroad buy multiple apartment buildings in desirable cities, and then proceed to keep living elsewhere (probably in a different residence in another desirable city) they create a problem that in no way resembles the result of buying stock in a company.
I agree that buying housing stock and leaving it empty is an issue. But they're not the cause of all the housing issues, in most cases they're a tiny fraction of the problem. Most cities have vacancy rates of just a couple percent. Given the average person in a big city moves every 4 years and a home is empty for 1 month inbetween tenants/owners, you'd already have 2% permanent vacancy rates. Most cities have vacancy rates of 3-4%, Lisbon has 5%. It's definitely stupid to allow high vacancy rates and most cities have laws against them (here in Amsterdam you get fined for leaving your house empty), but even shaving off 1 or 2% off the vacancy rates isn't solving the housing problem. It very often features in newspaper articles because it's a clickbait story: rich person buys home and leaves it empty. Again, it's stupid and we should expand laws against it, but solving it still keeps 99% of the issues with housing which have nothing to do with this phenomenon.
And this phenomenon is limited precisely because housing is a market, and from a financial perspective it's a stupid idea to buy an asset and forgo its use or its returns.
Beyond that, nothing that I noted about assets has a disconnect because everyone else owning housing simply rents it out at the market rate, which is both the most expensive but also the cheapest marginal price to provide an extra unit of housing, which is the same for any asset and there's no real disconnect here.
Not all assets are equal. Shelter is a basic human need. Creating an environment that allows speculation in this asset is bad.
Progressively tax the shit out of each subsequent property owned. Prevent foreign/corporate ownership of property outside of short stay, hotel/motel type accommodation.
Make shelter an extremely unattractive asset to own.
Unfortunately, many politicians across the world are also landlords.
Edit: My first paragraph conveys more frustration than perhaps I wanted, but it's what I think every time I hear this argument.
I don't think "basic need" is a good argument, as many other things are basic needs but function perfectly fine in a market-based system. This perspective sounds moral, but proposes nothing to actually resolve the problem (other than to advantage a particular section of the population at the expense of another - namely, people who would like to be homeowners). I note that most such proposals make no allowances for people who would like to rent - because they don't actually care about anyone other than themselves; they want to own a home, ideally at a low price, in a good location, with good services, on a large block.
Food is also a basic need, but does not get any of the attention because it is a functioning market.
In many places, property is not a very functional market, as suppliers (developers) are unable to respond to demand thanks to regulations/zoning.
> Food is also a basic need, but does not get any of the attention because it is a functioning market.
We'll see how that plays out in the coming year.
Lots of revolutions in history have been triggered by unaffordability of food, and step 1 of the classic formula for keeping people happy is food ("Bread and circuses")
I would really, really like to see governments taking this issue seriously, starting with a proper effort to determine how many of the residences in their jurisdictions are not used as a primary residence. I suspect the results would be enlightening and point the way to effective regulation.
I firmly believe that most investors are chasing capital gains as yields at current prices (even with extortionate rents) are mostly a joke. It's bad enough that some speculators don't even bother renting out their property.
A widespread residential property market crash would be painful but looks like the most likely outcome and solution. I'm hopeful that as interest rates rise capital gains will diminish, disappear, or even go backwards. Indications are that this is already underway in many places.
> It's crazy because all new homes and apartments are "luxury apartments" with insanely high pricing both for buying and renting. They're mostly empty or are (often illegally) rented out as holiday apartments.
You'd feel at home in LA.
I've seen this trend here for at least a decade now. I know some people who say that the construction of these luxury apartments is a sign that the economy is recovering, but I remain skeptical. These places are the least lived-in looking apartment complexes I've ever seen in my life. There's one down the street from where I live that was completed around 5 years ago, and I would bet good money that most of it is vacant. I rarely see people going to and from it, besides the occasional few who visit the burger bar right in front of it. Too many of the balconies look sterile.
I don't know why so many of these are being built outside of LA proper, but I have a theory for why there are these massive complexes being built; the rich have spoiled children they no longer want to deal with so mommy and daddy pay for these apartments to house them. I used to deliver food to these places and, without fail, I was delivering to men and women who appeared way too young to afford such places.
Its the same trend all over the world. No one wants to build/sell affordable housing since margins on that area very less. Everywhere its luxury housing.
> I live in Lisbon as a foreigner for more than 12 years now. We pay a rent for a small flat that used to be very expensive … Rents in the city have skyrocketed, we'd have a hard time finding anything
I know this comment won’t be received well, but aren’t you describing gentrification & how you participated (maybe unknowingly) in what has caused prices to skyrocket. And you’re now complaining because someone even more rich than you has caused prices to exceed your means, just like you did to a local person when you moved in as a foreigner.
Gentrification is an overblown concern. No one has the right to live in a specific area. Migration is human tendency. Just like poor people have a right to move from a rural area to a city in search of better employment opportunities, people with money have right to move to cheaper locations to get a better bang for their buck.
There's nothing overblown about being forced out of a neighborhood you've lived in all of your life. Now the problem is reaching epic proportions all over the world.
I also do not understand how the second sentence and the last aren't a direct contradiction of each other.
Gentrification is a "dysphemism" (opposite of euphemism). It's basically a buzzword made up to give a negative connotation to something that isn't inherently negative.
People move around. Some cities grow, others shrink. New jobs get created, old jobs disappear. Some housing gets more expensive, some housing gets cheaper. Some cities get wealthier, others get poorer.
We'd still be living in caves if our goal was to forever keep all cities and towns the exact same way they've always been. Which is basically the goal when people criticize "gentrification".
Yes and No. I described gentrification. No, I did not participate in it because I received a Portuguese salary from the start. I'm working at university where the salary levels are fixed by state institutions. (Which is a huge problem if you want to attract senior researchers from abroad, and also a problem because it causes talented people to emigrate.) The reason why I paid a rent that was then higher than usual was because landlords in Portugal assume foreigners are wealthier and therefore it was very hard as a foreigner to get an apartment at the low pricing that my Portuguese colleagues were paying.
There was a post on hacker news a while back about a study in Finland showing that it doesn't matter if the new builds are "luxury", they increase so supply which will always eventually stop/slow/reverse price increases.
This actually makes sense in terms of supply and demand but more interestingly it's because people tend to "upgrade" when they move this then frees up space at the lower end of the market.
The argument I've heard in South Africa for why luxury builds are the only things being built is that they're the only things that are profitable. After time and maintenance, ideally the luxury aspect falls away and it becomes affordable for the masses.
Same idea as buying a car - most people won't buy brand new because of the cost.
Some things I noticed as a foreigner exploring the Portuguese house market for the past 6 months:
Indeed, prices in Lisbon and Porto are insane. Yet, even in those cities (especially in Porto) there are quite a lot of old buildings, often in bad shape, and often empty, or sometimes inhabited by just one elderly tenant. You don't see that elsewhere in Europe in cities with similarly high prices. You would expect someone to buy these properties, renovate them and then rent them out. Clearly, the rental market desperately needs this new supply.
That this doesn't happen, could be because there is a lack of capital, but to me the actual problem seems to be over-regulation and especially an over protection of tenants. If, as the article states, foreigners buy multiple apartments, and then let them sit empty, it's because they are afraid of renting them out. Especially with elderly tenants, you can't increase the rent, and you can't terminate the contract. Once you start looking around for a house to buy, you'll almost certainly bump into some homes costing only a tenth of similar houses in the neighborhood, and any Portuguese knows what that means: there is an elderly tenant, paying only 20 euros of rent per month, and your only hope of ever getting them to leave, is wait till they pass away (and even then, their children might try to continue the lease at the same conditions).
Come on, it's nowhere near dire - it's expensive yes, like just about every other capital city - Lisbon is still way cheaper than Paris or London.
This poorly written rambling rant of an article has some valid points but no insight.
I moved to Cascais near Lisbon 5 years ago because of Brexit and yes property has boomed, like in many other countries but money printing QE is not just a Portuguese phenomena.
10 Years ago Portugal was a basket case economy (following the financial crisis) with many talented people moving abroad - now it's the opposite it's the fastest growing economy in Europe and Talent is moving here in droves. Of course the Tax and Golden Visa incentives to attract people have pushed up property prices but they have also provided many benefits.
Portugal is not densely populated Like England or Holland, even here in Cascais you see lots of unbuilt land or derelict properties. A major problem is supply side because of their slow and burdensome bureaucracy - it took us 3 years to get planning permission on a derelict property we bought for investment and we had to involve 2 architects and 5 engineers to get all the necessary paperwork in order, it's insane. Their job protection mentality needs to change towards a more dynamic job creation mentality - they need to reform their labour laws urgently to unleash amazing potential here. This would quickly solve the problem of low local wages. Many companies would invest here because of the incredible quality of life: great infrastructure, low crime, lovely climate, beautiful sandy beaches, quality food, the list goes on.
The average salary is quite low and those people are struggling a lot with their expenses and are completely unable to set money aside for a rainy day.
>even here in Cascais you see lots of unbuilt land
We have no intention of becoming a concrete jungle.
>Their job protection mentality needs to change towards a more dynamic job creation mentality
No thank you, please just keep your opinions to yourself, and honestly find somewhere else to go.
>low crime
Wrong, there's more and more crime, specially in Lisbon, Cascais, Sintra, and it's increasing in Porto and Braga too.
Specially on neighboorhoods with lots of "youngsters".
I don't think talent is moving in - at least in tech, there are lots of foreign companies opening offices and hiring local talent.
And for number two, it seems you're part of the problem the article mentions. You comain about how long it takes to work in a property you're INVESTINF in - but Portuguese people are struggling to afford property to LIVE in. That's the crisis, rich people investing in property makes it more expensive for poor people to own it.
I lived in Lisbon for a while. After expenses and a bedroom rent, my whole salary was spent, for a bedroom in a apartment shared with 3 other people. Many of my work colleagues lived in the peripheries and took more than 45 minutes to get to work, or more than 1.5 hours of daily commute. That's what the majority of Lisboets are being forced to, such that tourists and investors can have their happy lives.
This type of investment is causing lots of problems, and society should prioritize housing as a place to live in, not as a business to invest in. There are lots of other ventures for investors that don't ruin people's lives.
The property we invested in is derelict - it is not fit for habitation!
When we have rebuilt it it will be in great condition and available for a family to live in. Why is this investment a problem - do you prefer seeing many ruins?
I was complaining about the insane bureaucracy we have to go through, before we can even start rebuilding ie rents have risen because of supply problems and is not just a demand problem.
I don’t know what’s the correct approach with this.
I’m a globe trotting engineer who understands globalism and what access tech is opening up to it. I don’t mean being a digital nomad. Rather, tech is collapsing or expanding concepts of borders, nationalism and so on in very meaningful ways. That’s a hugely compelling area to work in vs chasing an OKR for Google ads. I don’t think it’s reversible, and I find a lot of value personally and professionally from being in that space because this is the rare moment where the world is changing and I’m in a field directly involved with it.
The other aspect is it’s locals selling to the foreigners, and a personally compelling reason to go there is urban areas of the USA have screwed themselves up with the cost of living. I want to participate in problems, not pay $5k/mo for a 2bdr in NYC or soon Austin or Nashville so I can go to bars with other techies. So if locals weren’t selling at hugely inflated prices, I’d be firmly in favor of that. So, look to the Portuguese neighbors selling apartments first.
But, no excuses - I see $500k 2 bdr in Lisbon and think that’s a chance to live in a world that is way too expensive and commercialized in NYC. A local in Lisbon is getting hosed by that and my mobility, no way around it.
In short - am I part of the problem, what responsibilities do I have vs the locals and govt policies about foreign purchases, do my motivations matter at all vs the outcomes.
I don’t know yet, Hard to say, although it’s good to face hard facts via articles like this. Networked-globalism won’t reverse, and I think it’s more likely the quiet parts of the world (rural America, cheap Europe) are just going to go through some transformations that can’t be stopped and the symptoms look like this article.
I think the fundamental question is by what right does someone have "right" to something like land or the buildings on it, by the open market and wealth or by already living there? Neither is really fair or equitable. But I worry what will happen as more people start to feel (justifiably so) they're getting a raw deal on both fronts.
The answer to your question is sovereignty and it is quite settled by this point in global governance. Who has it and who they gave it up to. As a republic, the citizens of Portugal are sovereign and they have the right to decide who gets to live where and for how much. The citizens can also choose to give up their sovereignty to others (the EU, globalism) or not exercise it (don’t vote or don’t hold their officials accountable).
Yes, I feel critical about capitalism because it decides questions like that and it seems like markets come up with cheap and anti-human solitons. Which is I think is a more important metric. How to get those incentives to work seems difficult and maybe this is better than other options, but I don’t believe it’s doing “right.”
That's what happens when you incentivize wealthy people to move in and buy houses in masses. Price rises and locals struggle.
Same happens when states competes to get the next big co HQ in town. It's a double edged sword.
816 comments
[ 2.4 ms ] story [ 267 ms ] threadWhat are the good arguments ?
Do you think the “global elite” is invading Portugal ?
In the context of receiving visas, that's exactly what already happens in Portugal.
The most extreme example is probably Comoros, which up until a few years ago you could become a citizen for $45k over-the-counter.
You guys are going to have it all.
If your power goes out or there is a water leak in your home, you need an electrician or a plumber. Preferably one who doesn't have to live five hours away. If you need an ambulance and medical attention, you need doctors, nurses, and medical personnel. Hopefully they didn't get priced out of a 50 mile radius of your home.
And if the world consisted of only millionaires and an army of robots, if everyone is a millionaire, no one is. A carton of milk would just cost $700 and a lower end house $30M.
Be a YIMBY. Embrace looser zoning regulations and more and denser housing where you live. And don't jack up the rent to market rates if you're already turning a profit.
due to not paying enough
Local businesses and towns are throwing money at the few young people still here in an attempt to recruit workers but there just isn't enough to handle the scale up for summer volume. The band-aid for years was J1 workers but it's no longer enough.
The wealthy don't think about Cape Cod for 1 second once they cross the canal, or leave the runway in Hyannis/MV/Nantucket. They seemingly don't realize that their "tax dollars" which they claim are a gift to the local region, aren't helping or solving any of these problems.
What we're seeing now is consolidation of businesses, and the construction of worker "dormitory" housing. That's the future for our region. Multi-million dollar trophy homes, and worker dormitories.
Because they are not paying them enough- hence the need for J1 workers
Eh. Waiting for people to forgo short-term profit from the goodness of their hearts under capitalism is a losing battle. The system must be built to prevent such behaviours and outcomes, rather than relying on individual good-will.
Ultimately, the only way to change to change things under a democratic process is to win hearts and minds, and in either approach, people will have to make hard decisions. Either it's forgoing short-term profit by loosening zoning regulations or forgoing even long term profit by enacting whatever large scale systemic change one envisions will solve the problem (strict price controls, rationing, expropriation, etc).
FWIW the electricians and plumbers are the ones living right next door to the techies. They charge ridiculously high hourly rates and there aren't nearly enough of them, so they can keep raising their rates almost without limit. Try to find a decent electrician for less than $150/hr (this is SF Bay Area). A refrigerator repairman will charge you $300 just to walk in your house and diagnose an issue.
Fun fact: I - as a single - live in a way too big, luxurious and expensive apartment because of this. I rented it, when I was still working for the man and was making a killing. Now I live a much more modest 4-hour-workweek life. It would be better for me to move to an apartment half the size. Then a big family could live here nicely. But no way. No landlord in Germany rents to a freelancer who enjoys a "I'm mainly slacking off for a while" lifestyle.
The issue is somewhat the same in Paris. It’s very hard to afford living there because non local use properties as an investment and prefer them staying empty than risking them degraded and people who want to rent make more money on Airbnb.
It’s fine if you want the city to become Disneyland but very depressing otherwise.
It's easy to implement, the market exists to price that amount, and provides a direct incentive to either put the property to productive use or get rid of it.
Building physical houses to sit empty as a financial instrument has to be one of the peaks of capitalist insanity.
I quite agree, and I am therefore very suspicious that this is actually happening in significant volume! I have never seen convincing evidence that this happens, and it, at least superficially, makes no sense as a money-making scheme (Worried about degradation? That just means you should get insurance.) In general, it doesn't make financial sense to keep capital idle, and claims of such should be taken with a grain of salt, especially if the messaging is politically charged as "rich foreigners are screwing the common man over to make money".
I agree that an LVT would be the solution if this were actually a problem. And that an LVT solves many other problems unrelated to evil foreign billionaires.
https://fred.stlouisfed.org/graph/?g=TiNw
https://www.usich.gov/tools-for-action/2020-point-in-time-co...
I would think only a small one-digit percentage?
There is also a substantial number of new luxury apartment buildings in my area with apartments that appear to be empty. Whether they are owned yet or to be sold is hard to determine but you can see when nobody lives there.
[1]: https://dre.pt/dre/detalhe/decreto-lei/67-2019-122349221
The truth is that real estate is merely a reflection of wealth. Some of that wealth is earned by hard work that others are not willing to put in while other wealth is just inherited and some people work hard and smart and still stay relatively poor.
Therefore we shouldn‘t judge so easily based on what someone has and go back to asking how it came about.
So I now have an apartment that's been empty and useless for 5 years, it did triple in value in the meantime but it's such a huge waste
Two wrongs don't make a right.
taxing empty - yes
limiting short duration - no, just tax it more. Limits are too easy to hack.
Lack of building when the population is still growing.
Encouraging single lifestyle, both by kicking out kids early and shacking up later.
Cases where sitting on an empty property is risk free.
Infrastructure increases taking valuable space.
Giving early birds great deals compared to today, making them sit on huge housing for a pittance and making moving out a terrible deal.
And politically, there simply is no immediate incentive to solve things when the current population of homeowners does not contain enough people to vote in favor of those that don't own homes.
That's one of the reasons why portuguese renting market is so bad. There were rent control policies for like 40 years. It has been phased out but the market still has the signs of its damages.
There also other contributing policies and the policies change almost every two years.
I'm one that could invest in the market, to bring more houses to be rent, but I can not risk 150 000 euros buying a house to rent (middle income market) and then having problems evicting with a non-paying renter, being forbidden to increase the rent due a new law or god help me if I need to use the court system to ask for renter damages.
Someone in a position of economic vulnerability isn't going to invest in housing to rent out if there is a non-insignificant chance of damage to the property.
Moreover, this uncertainty has the perverse outcome of pushing the potential small landlord to use his funds to invest in something like a real estate investment fund - which will result in less local control over housing.
I think it’s time the English speaking world realised that landlords are not providing a service, they are extracting a tax on people that don’t have 150K to pay a deposit.
When I was younger I would really like to have more houses to rent... I don't really care if they provide a service or not, it's the cheapest and more liberating option available.
If the neighbors are a hell... I could just move out. Or if the house was not close to a gym I liked... move out.
I can have 150000 euros which I can use in an emergency, like being unemployed, long sick leave, needing move out of country due to family reasons OR I can risk not having it available when I needed and earn some money. Without the profit I have no reason for the risk.
Furthermore, me not investing removes a house from the renting market which makes it harder for people with less income, specially young people. To have a place to live because the same house will be available for purchase through a mortgage... and mortgages are not good.
You have to make a 10% down payment and you're almost always tied to a flexible interest rate... so people with less economic freedom are the ones to suffer the most.
You might disagree that things should not be like this which is fine, I'm only arguing over what happens now.
Unless you are proposing to take his extra 10k euros by force, or let him invest it elsewhere?
If you want him to invest his 150k euros in housing you need to (according to him) lower his risk.
Some have been unable to raise rents since the 1910s!
However, you can't have it both ways. If
> countless stories of flats left uninhabited by some rich person who arrived at the building, bought two flats so that he could get a visa, and doesn’t even live there
then clearly not
> wealthy foreigners from all over the world, to whom we offer a paradise where they enjoy the same services but where they don’t pay or pay less tax than the general population
Either they live there and use services or not.
However,
> countless stories of flats left uninhabited by some rich person who arrived at the building, bought two flats so that he could get a visa, and doesn’t even live there
So, the way it works is, as a golden visa applicant, you have to spend 7 days in the first year. The next 2 years, a combined 15 days (which can be spread whichever way you like). Subsequent renewals are different (21 days / 3 years). You can already live there when you apply, but you are not _required_ to.
You have to maintain your investment for at least 5 years (or until you become a permanent resident) and renew the golden visa twice. Then you can apply for permanent residency (or citizenship if you qualify), if you want to.
It's entirely conceivable that people would buy property and only vacation there. Which, if we are honest, is not a problem, given that large cities are excluded from the program. And cheaper housing does not qualify, either. So you would be taking property that's pretty expensive already (€500,000, €400,000 for low density areas) - OR requires the property to be older than 30 years old, and a minimum of €350,000 (or €280,000 in low density areas).
1) The investment doesn't need to be in a single property; you could buy up multiple smaller properties that sum to the amount you need, and rent them out or leave them empty.
2) There are also hotel investment options rather than buying up existing real estate, and those are still available in the big cities as they are considered 'commercial'
Generally, having all these big money foreigners trying to come to your country is a good thing. It sure beats having no industry and you can crank up the tax heat on them as high as you want since nonresident-noncitizens don't vote. The real problem is that the Portuguese government is not being made to share the bounty of a few winners with the rest of the population, who are instead left to just deal with the externalities.
There is another path that does not involve locking the doors and hanging up a "closed for business" sign.
The EU could change all of this and go for true European cohesion with Eurobonds under the blue/red proposal... but that's another story ;)
> Generally, having all these big money foreigners trying to come to your country is a good thing. It sure beats having no industry and you can crank up the tax heat on them as high as you want since nonresident-noncitizens don't vote.
Well but do they? Where is the evidence that golden-visa/NHR recipients have actually helped create jobs, invest, create industry...? In fact, there appears to be evidence to the contrary: https://www.publico.pt/2021/12/25/economia/noticia/vistos-go... (translated: "Golden visa: in nine years, the program created 241 new jobs. Investments which led to the residency permits since 2012 amount to 6000 million euro, the vast majority of which went to real estate")
The country might be poor and in debt overall, but somebody is getting rich off this real estate bubble and it is within the government’s power to make them share.
I wish we had public data showing how much each person in parliament/city government gets each month as rental income... would probably be pretty enlightening.
As it's common, the housing market reflects many errors and not just one.
(Probably similar for other EU countries with high relative purchasing power)
Absolutely no idea how it can be fixed as there is only so much space to build on in the large urban centers everyone wants to be in.
Lisboa and Oporto are hideously overpriced, and it is indeed hard to see how a normal Portuguese earner can afford to live in either. Even Vila Nova de Gaia, which was the “cheap” side of Oporto, is now parlously expensive.
This effect has bled along the coast, and many coastal villages now ask €200k for an unmodernised one bedroom house.
But… the interior of the country is still facing depopulation, and property prices and rents here (between Bragança and Miranda) are still low. A five bedroom house in a town in decent condition can be had for €100k. There’s a beautiful 16th c. T8 palazzo needing modernisation in our nearest town for €80k.
People don’t earn much here, but they don’t spend much, either - a lot of food is home grown or hunted and bartered, heating is from firewood, and most folks drive perhaps 50km in a week, as they live within walking distance of where they work. Almost every house that’s had modernisation done uses solar for hot water and to supplement power. They deployed a gas network four years ago, and shuttered it last, as nobody is using it. Property taxes on the above properties are about €100 a year.
They’re desperate for people to move out here - lots of vacancies, not enough people to fill them. They’ve rolled out gigabit fibre to the villages, which they are literally giving away. We’re the only estrangeiros in the county, bar returning Brasileiros.
So. The reality is that which is being played out all over the world. Cities are becoming unaffordable for mere mortals - and, in my view, that’s ok, as cities are past their useful life as industrial hubs and have principally become destinations and speculative investments.
I’m not advocating some sort of “return to the land”, but rather that people are going to have to consider that perhaps they don’t all have to live in the top 5 cities in their country.
Sure, I can’t get takeout here, but I can breathe fresh air, sit at a quiet cafe and chat with my friends in the village without enduring traffic whilst drinking my €0.60 coffee, and support local businesses run by local people, rather than vast corporate chains.
Since we’ve moved here, particularly during the pandemic, we have seen quite a few young Portuguese couples move here from Oporto - some with family ties, some without - they’re starting businesses, families, renovating old abandoned homes. It’s genuinely exciting to see the beginning of something.
The pendulum swings, the market speaks, the world turns. Sure, we may be facing down collapse - of the current way of doing things. Not of all things.
Edit: just to demonstrate the veracity of my statements re property prices here: https://www.idealista.pt/comprar-casas/braganca/vimioso/vimi...
Some people just don't think very highly of "flyover country". The culture is not what they're used to. Return to the land makes a whole lot of sense though, now that the basic infrastructure for hybrid remote working is pretty much ubiquitous (courtesy of COVID).
"BC? British Columbia? NS? New Jersey, no that's not with an 's' ... Arg, no idea!"
It is not mandatory for me to understand all the abbreviations. Just that sometimes I would like to understand more, without having to guess states.
When I transition from tech, I hope to spend my time building affordable housing in Portugal and Spain.
(1) Bar agriculture and remote work, there are very few jobs in the interior of the country. I think in this forum we may have a skewed perspective since our sector is by far the one where remote work is most common. But most people simply don't have the option to earn 10x minimum wage from their computer while sitting in an idyllic mountainside village.
(2) Many people like living in rural areas. That's great! But many people also do not. I like nature walks and mountain biking and clean air as much as the other guy, but I also like restaurants and classical music concerts and nights out. I sort of have that right now by living in a rural area 10m away from a mid-sized (150k pop) town, but I don't think I would like very much to live in the middle of Trás-os-Montes for more than a few months.
There’s also the whole virtuous cycle thing - more people move here, bring more commerce, more demand, secondary and tertiary industries develop.
I hear you on lifestyle, however - this wouldn’t have been for me when I was in my 20’s, but at nearly 40, and finally wanting to start a family, it’s ideal - and many of the younger folks moving here are in the same boat.
That said, there are restaurants, some really good, and transport around here has improved such that Bragança is only 30 minutes from Vimioso now, rather than 1hr+ it was 10 years ago, and it has all the amenities of a secondary city. Oh, and we had an excellent concert a few weeks ago - after the bullfighting. But I agree, it isn’t for everyone - but it’s perhaps for more people than might realise it.
That's exactly what I saw when I was looking at properties there. And honestly the towns where some of the cheap properties were, were not half bad. They looked like they had all necessary amenities. I can't speak for their job markets though, which could be the main reason for the issue.
Well, compared to capitals in some countries in Europe, that is still cheap! Try half a million for a completely empty run-down flat.
I think it's an interesting question: why are there only a handful of "top" cities? What can we do to make cities that aren't desirable, more desirable?
I almost think that the US is doing pretty well with this in the sense that you can still move somewhere that's cheap relative to your salary, but that only holds true if you're able to do it with remote work. So, maybe it's not true at all.
Portugal's demographics, like much of western Europe, didn't look like they were going to change dramatically: https://en.wikipedia.org/wiki/Demographics_of_Portugal - so getting set up to build a bunch probably wasn't a priority.
It looks like immigration picked up a lot, and also there has been an influx of wealthier immigrants.
It will be interesting to see how they handle it. Having people with money move to your country ought to be a positive thing, but you need to build housing for them so they're not competing with locals - and winning.
But the US is large and there are places where housing really isn't the issue (but there can be other issues, too).
https://www.theatlantic.com/ideas/archive/2022/08/housing-cr...
The US has places that you can live cheaply if you're able to arbitrage a remote job. It doesn't look as good if you're not able to work remote.
It's really impossible to make generalizations about the legalities go building in the US, as there is no federal control over such things. There are some state-level laws in some states, but for the most part zoning is left up to cities and counties, leading to literally thousands of disparate sets of laws and regulations.
My city has historically heavily restricted high density housing (until the state stepped in), while the city literally next door has added enough high density housing for ~20k people in the past decade.
This is an interesting book about the history of it all: https://www.cornellpress.cornell.edu/book/9780801479878/zone...
More than anything, NIMBY neighbors keep killing less expensive forms of housing... 100's of homes, I would say, in the time since I started observing the situation.
STR's make for a convenient bogeyman that people can point their finger at. It's a bit more disturbing when you realize it's actually your neighbors; kind, ordinary people in most regards.
STRs just slipped past the NIMBYs because they weren't on the lookout for it; it won't happen again!
The government has said they're going to start tackling the issue of short term lets this month. I'll believe it when I see it.
But pre-covid Airbnb was about 10% of the total stays versus Hotels. And tourists in total were about 6% of the overnight population throughout the year on average, again the majority in hotels. And after corona this is a lot less due to new legislation (which caps it to max 30 days per year without a hotel license).
But yes, tourism obviously pushes up prices, but there's a big benefit to the local economy of course as well.
He could rent them out, but the long term rent contracts would not net him the same amount in a year than what he gets in just the summer months. Plus, long term contracts have a lot of other expectations from him as a land lord, whilst Airbnb is pretty chill.
From his point of view, airbnb is amazing, from my point of view when I was searching for a flat, I wanted to stab him in the face. It is what it is.
Canada has a well-developed and diversified economy. Portugal needs to import a lot from the world, but has very little to offer in exchange.
They found something: their real estate and city center spaces.
The country NEEDS this foreign income. It's not a self-sustainable economy and the world won't work for them for free. If the Portuguese want to solve this issue, one way is to study what else could they develop internally that would be attractive in the world trade market.
Also, foreigners are looking for the European passport, not for Portugal per se. If Portugal were to follow UK's path, demand for their Golden Visa would drop dramatically.
It doesn't benefit the rich, only. By raising real estate prices, it stimulates the construction business, which is labor intensive and has a long supply chain. It benefits the entire economy of the country.
Ukraine had traditional industries but it seems like the IT/knowledge worker base they built up over the past 5-10 years seems to be softening some of the economic blows of the war for them, but I can't imaging IT is the answer to every country...
They are looking to expand their maritime territory. They might have a credible claim to it.
The key is: stop complaining about "the rich is this, the rich is that" and start thinking about how to be competitive in the 21st century. There are many opportunities, but are Portuguese citizens interested in taking the effort and sacrifice to explore them? The answer to this question is the real explanation for the hard time they're going through, not "rich-blaming".
If the US can put 40% of its working populace into some lower-rights having class, like strip their citizenship, we would have a comparable public housing tax base.
If you live in an advanced urban economy, with relatively open borders and free market real estate, you have to get with the program or get forced out. You can argue that's a good thing, or a bad thing.
-------------
>Why is this exploitation? The country is offering a lot of positive things to foreigner
Pretty unsophisticated logic here. The idea that something good was obtained, therefore a policy can't be exploitive, is on face absolutely an unfounded and absurd claim.
I bet they're happy to live there, despite the housing costs.
Why is this exploitation? The country is offering a lot of positive things to foreigners. I'd love to have a Singaporean passport and be able to live there if I could afford.
May want to keep your comment deletion considerations to yourself.
Source:
> [immigrants population is] 1.23 million, out of which about 351 thousand were classified as skilled labor. Most of the foreign workforce [...is employed...] in construction and the service industry, or as domestic help.
-- https://www.statista.com/statistics/698035/singapore-number-...
The US is already working on this, albeit unintentionally.
Undocumented immigrants were at 3.3% of the population in 2016 and the numbers have absolutely exploded since the beginning of the Biden administration, with 2 million apprehensions so far for in 2022 [0]. The cumulative effect of this over just a single term of the Biden administration will completely reshape the demographics of most of the border states (and most major cities of the country), as the majority of immigrants are arriving with very little means, extremely limited ability to speak English, and will be mostly restricted from accessing the US financial system without legal residence status, hobbling them financially and forcing them into informal work arrangements.
[0] https://www.wsj.com/articles/illegal-immigration-arrests-hit...
I hate to be that guy but do you have a source on undocumented immigrants availing themselves of the legal system en masse in the US?
If you're interested in unfiltered perspectives, I would encourage you to focus on articles that specifically quote active Border Patrol agents who are working on the border. It's quite different than anything you hear from Washington DC.
They degraded me in almost every way possible, except penetrating me, and one other lady who they dragged to the same hospital as me wasn't even that lucky. Fuck em. Oh yes, I'm a US citizen (who looks white, middle class, speaks fluent hick english, normal), with an unquestionably valid passport who has never broken any border related law, and they never found anything. I would rather 100 illegals get through than any other single person be treated the way I have by border patrol. Border Patrol is a criminal organization, depriving rights under color of law and should be prosecuted under the RICO act.
As long as salaries in the US are double, triple, or more than people can make in their home countries, there will always be more economic migrants than the US system can accommodate. It's a very simple case of supply and demand. No "root causes" strategy is going to change anything about the situation facing destitute, rural laborers in the Northern Triangle countries in the next 5-10 years. It will always make economic sense for them to attempt to immigrate to the US. The only thing that will stop them is a significant deterrence policy from the US government.
Portugal could impose a foreign buyers tax, use it's egalitarian/socialistic political culture to incentivise some small-n natalism, and leverage the unbelievable cultural resources it has as somewhere that is a respite from the blob of tourists that it has allowed to imbalance its economy.
It's not so much IT that would change the economy, but honestly - math. It's the only real social advantage that a country can organize to leverage, and the next country that triples down on its math education investment is going to be the next power base. Given what I've seen there that the article captures perfectly, it's probably their only hope.
Ironically, excellent education might be one of the most positive legacies the Communist regimes left to Eastern European countries, and part of why countries like Estonia or Poland will be better poised in the near future.
Portugal is the only country in the OECD that has consistently risen in PISA scores since their inception in 2000.
Portugal was bottom of the table in 2000, and now it's at middle. Not the best, but not the worst either.
Source: https://link.springer.com/chapter/10.1007/978-3-030-59031-4_...
In the US there are 50 states to choose from for remote workers. And then outside that is the rest of North/South America all within a narrow time zone band.
It's just parking money. It's the last thing a socialist country like Portugal needs, because it screws up the real estate market making housing unafordable to the general population, who lives, works there, pays taxes and maybe has kids. What they can do is tax all property as if one is renting it, like Switzerland does and use the 6 month median rent as the tax base.
The Lisbon downtown is cruise ship territory anyhow, I fully understand why a group of youths was protesting against (those kind of) tourists. They treat every city like it's a theme park.
It's not hard! We knew how to build a lot of housing on a particular parcel a hundred years ago.
Maybe, but only if the increase in wages paid keeps up with the rising rents. And remember that in unregulated capitalism, most of the income from increased economic activity is captured by the wealthiest tiers, with only negligible increases for the vast majority. The rising tide indeed raises all boats, but it raises some boats far more than most. If rent rises 10% but median wages rise only 2%, most people will be losing ground, not gaining.
Cheap labor.
In fact, some of the cheapest in the EU - both qualified and non. It even can be said that the current Portuguese Economic Model is intra-EU salary dumping.
(and a lot of rent-seeking)
Whichever country has "good" real-estate prices and golden visa requirements to match will have foreigners buyers.
[1]https://fivethirtyeight.com/features/money-and-elections-a-c...
There are also countries like France which only imported cheap and poor labor. France never tried or even discouraged rich people to settle in the country with punitive taxes (compared to our neighbors and other western world countries). For instance London has (or had) rich Russians/Indians/Pakistani investors who made London their residence, not the case for Paris, foreign real estate owners don't take French permanent residency.
And nowadays, we are left with some politicians who promote economic immigration even when there is no need or deny any form of control on illegal immigration mostly to import voters.
> It's barely right/left at all, it's just nihilistic power as its own end.
These statements are skillfully leaving out "ethno" part of nationalism. Once you add that quite obviously real and active element back, it's very much a left/right difference.
The left's solution to the problems brought about by globalization is to subtly bias the scales of re-industrialization policies toward the domestic labor market - evidenced by things like the battery materials sourcing and assembly location requirements, and income limits of the recently passed EV tax credits.
The right's solution to this has been playing on fears of a purported invasion by non-white citizens from lower income countries. A decade ago that would have been a controversial claim to make about the right, but today's right openly proclaims those ideas.
Portugal's case is interesting because they lived under a nationalist dictatorship that only ended in 1968, so many people alive today remember living under that. In my travel there, I found that many people in the age groups that vote heavily conservatively in the US and UK instead vote democratic left as a result of their lived memories of nationalist dictatorship.
Portugal does need to figure out what else has to offer the world economically in addition to great weather and beautiful cities and countryside, in order to have a better balance of trade, but it's unrealistic to think it can do that while shutting down immigration.
The underlying grievance is of course not over "increased diversity" per se but rather the long-term decline in civic attitudes. The progressive left expresses the exact same concerns in a different wording, by decrying the increased "marginalization and exclusion" that's seemingly entailed by such diversity. Guess what: they're all looking at pretty much the same thing.
I fail to see how the previous US president's complaints about people coming from "s*hole countries" and the exhortations from the Charlottesville rioters about how "Jews will not replace us" are grievances about "decline in civic attitudes". Try as one may to dissociate them, but these are the faces, words, and animating motivation of nationalism today.
Your argument is intentionally mixing "is" with "was".
Marx died 140 years ago, and there are no ethno-nationalist voices of significance on the left today. In the US context, after the civil rights movement of the 20th century those people left the Democratic party as the parties realigned themselves.
Today it is largely a right wing phenomenon, carrying forward the tradition of right wing ethno-nationalism that persisted from the previous century.
You can have a relatively affordable city like Montreal and still a lot of homelessness.
The homeless people in my neighbourhood are all crack addicts. They get up and urinate/shit 3ft from where they are standing instead of walking 100ft to the park. They are 'feral'.
If you gave them a 'home' it would immediately be a crack den for them and their buds. The bathroom or anything else would literally never get cleaned ever. It'd fall into disrepair quickly. There'd be no hope of them having any kind of job or anything like that.
The other 1/2 are temporary homeless, usually due to some kind of calamity. Housing prices isn't so much the problem a they need to be 'stabilized'. A 20% shift in rental costs will not affect those people very much.
Low housing costs can positively affect a huge swath of people, freeing up income for other things, but it won't change the number of crackheads on the street and probably not the % of people that 'fall out of the system' for a few weeks.
High housing costs are mostly a strain on working people. w
Oh, and tax the unimproved value of land and give the proceeds to the Portuguese citizens. This will dampen the effect while supply of housing matches demand.
Pandemic came, he stayed in Brazil doing remote work. Found him a few days ago. He told me he gave up going to Portugal and decided to stay in Brazil for now mostly because cost of living there. His initial salary would be 1.6K euros.
Uh, this is almost certainly data for the US city of Brazil, Indiana https://en.wikipedia.org/wiki/Brazil,_Indiana -- not the country of Brazil
As sibling has stated, Brazil (properly pronounced "BRAY-zil") is a small town in the U. S. state of Indiana. What amazes me though, as one that grew up probably 20 miles from the town, is that anyone in Brazil, IN is paying $62K/year. But it's been 30 years since I lived anywhere near there, looks like it's grown a little.
Now, even in suburbs, housing is far more expensive than most wage earners could expect to afford.
Maybe we are thinking of two different sides of the same coin, but I would genuinely be interested in reading articles from the ~mid-century describing what you suggest.
Over the next several decades as the boomers die off or move to retirement homes the housing supply will increase substantially, and the value of properties in most of the US will plummet.
As they die, and pass on their property, their kids will just retire young and rents will still rise, along with the prices of luxury goods.
I'll believe that house prices are high because of constrained supply when I see the prices of luxury goods drop.
I always find this a bit of a disappointing discussion, cherry picked to the extremes.
If we're being honest in talking about the cost of housing, we'd try to make apples to apples comparisons.
For example, if we used to eat apples that were 2 inches in diameter, lacked sweetness, had lots of seeds in them and started to rot after two days, and then 50 years later the average apple was tasty, 10 inches in diameter, seedless and juicy and lasted two weeks, you wouldn't necessarily conclude that because its price had doubled that apples have become more expensive.
But we kind of do that with housing.
Since 1969, homes have more than doubled in average size. Such homes were shared by 3.3 people, now by 2.5 (or 25% fewer people per house). And we used to pay 10% interest, now 5%.
So we have 2.6x as much square footage per person, and pay half the financing cost as we did before. And median nominal personal income tenfolded since the 60s. Of course you expect home prices to increase by a lot, it doesn't mean housing was laughably affordable and now isn't.
In fact there's quite a few studies which show that a unit of housing (e.g. the percentage of income spent on a square foot used by 1 person) has gotten cheaper. We just happen to consume more of it, and share it with fewer people, and pay less to finance price levels, which pushes the price levels to new heights without housing itself having become more expensive. [0]
If you then take into account the quality of housing and neighbourhoods, you see even the above is still an apples to oranges discussion. The amenities inside the home and in the neighbourhood are simply no comparison. I literally have a supercomputer allowing 3D simulations of any kind known to creativity on a screen with better quality than a 1970s movie theatre (I'm talking about a PS5 on a 4k screen) in my home. And I live in a town with 190 nationalities and as many kitchens within a 15 minute commute, just like parties with every denomination of music and dance, multiple universities and schools teaching just about any skill, shops selling just about any worldwide product I'd like. Of course all this access comes with a price because there was scarcely a place on earth like it 50 years ago, and now my city (Amsterdam) has many equivalents around the world, Lisbon being an example named in the thread's article. If you put our lifestyles and general wealth of pretty ordinary people like myself in these cities to the test of any city 50 years ago, you'd maybe find some of the very elite in NYC and London living like that, and that's it.
[0] https://www.forbes.com/sites/steveforbes/2021/06/25/us-housi... -- this isn't a proper study, but does substantiate some of the claims I made above. It's even missing some things (it overestimates principal paydown as a cost rather than a cashflow, and it doesn't account for quality differences).
I sometimes put a footnote in when I mention that house prices haven't changed in "400 years" because the records are from the Netherlands, but in your case that makes them more relevant.
I appreciate your approach, and I hadn't considered this perspective, but it still rings hollow to me:
Can I purchase 1/2.6 of a house? Just because the unit cost of housing has gotten cheaper doesn't mean _owning a home_ is more affordable.
Sure, I'll accept larger homes are being built at cheaper unit-cost. But those homes are still being snatched up, continuously "above market". Why aren't more smaller homes being built at similar unit-costs?
The problem is land has gotten expensive, not so much construction. Also, regulations and the like generally raise the bar for what is considered an acceptable house, which also contributes to rising prices (eg. things like mandatory minimum parking, housing amenities, etc.
Some places want to ban apartments smaller than a particular size because they are "expensive dog-boxes", which rather misses the point. I imagine the logic is that larger apartments will be available for the same price if such comes to pass... People are capable of impressive mental gymnastics.
Not if no one is building (or selling) the smaller houses, possibly because of the reasons you give in your second paragraph.
Your third paragraph starts to align with what I said. But "buy a smaller house" is not a helpful response to "there are no small houses for sale".
- Increasing income inequality short-circuiting the backpressure role of market pricing (and, more specifically, the use of home ownership and immigrant-investor programs as a way to sidestep restrictive immigration systems)
- Countries attempting to replicate the American suburban lifestyle, which is economically unsustainable as voters are incentivized to constrain supply in favor of "line go up"
- The economic gravity of living in a large city.
The econ 101 explanation of markets is that increasing price lowers demand, but this is determined by the "elasticity" of the supply and demand curves. The shapes of the curves determines what the market will do when supply or demand shifts. But if these curves are straight lines, or "inelastic"; then suppliers or buyers do not compromise on quantity and the market gouges people.
Supply is inelastic: most cities are hostile to redevelopment and all the economically-viable land in the city has been used up. No matter how expensive housing gets, people will not be able to build more of it, so price goes up more. In fact, when housing gets more valuable, there is more political resistance to increasing supply, which makes prices go up more.
Demand is inelastic: most housing buyers need to own a house. Homelessness is at best inconvenient and at worst illegal. Moving out of a city is expensive, and will require finding new employment, possibly at a lower hourly rate or salary.
The end result is that the housing market works less like a market and more like NFTs pre-a-few-months-ago. It is politically engineered to ensure quick and profitable exits for the vast majority of homeowners. However, this process cannot go on forever; because eventually home costs will outstrip wages, which puts backpressure on the whole "line go up" thing.
This is where the rich and powerful come in. They do not respond to pricing backpressure the same way you or me do. If a flat in Portugal is a million euros instead of half a million, who the hell cares? They can afford it anyway. They represent "greatest fools" - people who can resolve a speculative bubble by just buying the asset and not caring about it.
It's also kind of a mistake to say that "the Portuguese can no longer afford to live in Portugal". The population is not a monolith; it's more correct to say that today's middle class Portuguese cannot afford to live in their own country, but prior decades' middle classes absolutely could have, and the price inflation in the housing market is specifically to the benefit of those people.
Really, where? I thought only fractions of the anglosphere replicated this (like parts of Canada). Extremely few Europeans would want that lifestyle, for instance. The trend seems to be moving aggressively in the opposite direction, with large and dense cities attracting the majority of new people.
This goes back a long time. The stockbroker belt/home counties as where commuters into London live has been a thing for more than a century, since railways then automobiles made this practical.
The attitude klabb3 mentioned of "Europeans don't want American suburbs" is, as I think he is realizing, nonsense. No matter where, no matter who, the majority of people prefer detached homes with lawns if they can afford them. (I speak as among the minority who prefers dense living.)
Eh. Yes, people want ponies. Suburbia does indeed optimize for this parameter, but they sacrifice almost every other. Single family houses with lawns is nothing new in Europe, but most of them are rural.
I'd still defend that for the vast majority of Europeans the attraction of American suburbia is very low. Most choose to live in apartments in dense cities that are most attractive near the center. "Walkable" is a term i first heard in the US, that is quite meaningless in Europe, for a reason.
Step 2: sell out your country to wealthy foreigners to "stimulate the economy"
Step 3: act surprised that you can't afford living in your country, that got sold out to wealthy foreigners
Does Portugal have US style NIMBYs ? Why not build more housing
Sounds like Golden visas worked at attracting foreigners, raising Portugal’s land value, and incentivized citizens to move to depopulated areas
What a fucking disaster. Selling off national assets to foreign investment groups.
>China Three Gorges Corporation, a SOE, won in December 2011 the bidding for the Portuguese government's 21.35% interest in the company. The transaction is expected to be concluded by April 2012. As of February 2014, just under 45% of the ownership of EDP was controlled by five institutional shareholders. Amongst the others were the Qatar Investment Authority and BlackRock.
Qatar, China, BlackRock. Can't find a better bunch.
Blame also the eagerly colaborationist Portuguese government from 2011–2015.
> The government has taken desirable measures for foreigners, making it easier for them to get golden visas if someone invests a certain amount of money. My husband, who works in real estate, tells me countless stories of flats left uninhabited by some rich person who arrived at the building, bought two flats so that he could get a visa, and doesn’t even live there.
There are a bunch of restrictions on where and what types of properties qualify. You can no longer buy property in large cities and get the 'golden visa'.
I do not think that is the main driver in large cities. IF these price hikes are indeed driven by foreigners, it's probably other European Union residents.
> Nowadays, flats are being rented in Lisbon for four thousand euros
Yeap. Rented. So why did they bring up the visa thing? You can't qualify if you rent.
Also, housing prices have been increasing all around the globe at the same time economies are screwed up and inflation is rampant everywhere. Blaming foreigners seem... xenophobic? I didn't know Portugal was like that.
For starters, is there enough new construction to satisfy demand? If not, there's the answer.
> (...) And if Brazilians, who must be the largest source of Portuguese immigration, move here
Wait. I thought the problem was rich foreigners? There are rich people in Brazil sure, but I seriously doubt their numbers would even move the needle. The overwhelming majority of expats are _not_ millionaires. If you are that rich, you can have a pretty great quality of life and would only look to live in Portugal if you were really into Europe or something like that. Rich brazilians are more likely to want to have property in Miami.
> The Portuguese are becoming, nothing more and nothing less, the servants of big foreign millionaires
Back to the foreign millionaire thing.
Way back in 2012 I had the opportunity to live and work in Europe. I considered Portugal, but while the country is amazing and the food is good, the salaries were utterly terrible compared to the neighboring countries. It seems that things have not changed.
For example, it claims Brazillians are going to Portugal in large numbers because Bolsonaro...
Except, Brazillians are going to Portugal in large numbers, because the Portuguese government invited them, out of necessity since the country is depopulated and has low birth rates.
I am one of the Brazilians that intend to move to Portugal, and part of the reason is that I am not exactly Brazilian, yes I was born in Brazil, but my family is from Portugal, and I was raised with a Portuguese culture, I just don' t feel like Brazil is my home and want to try going back to my family hometown (Leiria) to see if it is a place that clicks with me.
Lisbon and other metropolises indeed are bad, but because a incredible amount of people want to live there despite lack of enough land there.
And infrastructure. Lisbon is incredibly dense, partly due to its historical neighborhoods that's impenetrable by modern surface traffic, and a subway network with insufficient reach for a growing metropolis, resulting in everyone packing themselves denser in the few desirable areas.
https://www.euribor-rates.eu/en/current-euribor-rates/4/euri...
Flint's population has rapidly declined over the past 40 years and continues to decline (its population is less than half of what it was at its peak), so there's not a population boom driving up demand. Flint is not exactly known as a tourist destination either. And to top off, Flint is most well known for its contaminated drinking water that contains lead. So why on Earth would such a place be experiencing a housing shortage?
The obvious answer is that governments around the world have brought interests rate down to zero, which forces investors to seek out riskier and riskier assets to invest in. Instead of investing in traditionally safe assets like treasuries and bonds, investors now have no choice but to invest in stuff like tech startups, cryptocurrencies, personal loans, mortgage-backed securities, and dilapidated houses in the Midwest.
Maybe in the USA. In other countries real equity returns have been negative for decades.
We see it time and time again. Policy makers try to address the symptom but not the cause, then people cry when nothing gets fixed.
Really, it is not appropriate to wish them all suffering, because of some historical fact, which they most like did not have a hand in. A little empathy seems appropriate. Maybe with more empathy in the world, we would also see some more apologies for historical injustices.
I am Brazilian. I do not blame the current Portuguese people. Heck, I don't even blame the Portuguese back then, just their government. I want Portugal to prosper.
Asking for an official apology is fine. Blaming ordinary people who are just trying to live their lives, is not fine.
Before Portuguese came it was only forest and some indian tribes fighting each other.
They literally gave a whole country for us Brazilians.
Or you really think some (maybe 80) Portuguese that came desperate, with hunger and disease after months sailing would be able to "genocide" all natives?
I know what "history" books says, but it is bulls*.
The prince still live in Brazil.
We own the Brazil to the Portuguese.
They are our Older brothers
All the infrastructure we left you weren't able to maintain, as it happened with 99% of the African countries.
Total mystery why.
Central city locations in Lisbon and Porto have exploded in price, but this is due to AirBnB rather than rich expats. Portugal's tourism industry has boomed, which has put money in a lot of people's pockets, but has distorted local economies somewhat. Better management is required, for example cracking down on AirBnB and NOT building that new cruise liner terminal.
Unfortunately the upper middle class idyll (alluded to in the article) of living a dilapidated (but in a cool way) apartment ten paces from your favourite coffee shop, while doing a socially respectable play job is now no more viable here than in SF, London or Berlin. Indeed, my own favourite 'coffee shop' got turned into a chain tequila bar.
Outside the hot centres, things aren't as bad. Public transport (at least in the AML - Lisbon Metropolitan Area) is excellent by any standard, and decent apartments are available for sensible prices well within one hour public transport commute of the downtown. Compare with London, where people are fighting over each rental.
> family factor weighs a lot here
Yes, and this is a problem, given that Portugal only became democratic 48 years ago and has a large amount of cultural baggage from quite frankly medieval times. Also, the implication of this statement is that family doesn't count elsewhere - and in case you missed it it was spelled out a few lines later, which should give you an idea of the residual naivety and insularity of (old) Portuguese culture. Agency - the idea that you can do or think something independently, and then take responsibility for it - is somewhat lacking too.
But! There is much that is very good about Portugal and the Portuguese people, I feel that here it is ok to be kind to each other. Furthermore, there are good changes, new opportunities are arising (perhaps in a very small part to some of the more productive visa holders), and I see a great future for Portugal - even if many Portuguese often don't.
Why do you say that the rise in housing prices has been due to AirBnB but not to rich immigrants? It seems a bit odd. Both can outbid the average native and just push prices high. Many rich immigrants also buy up loads of property for speculative/investment purposes, not just to live in.
>has a large amount of cultural baggage from quite frankly medieval times
I wonder what exactly you mean by this.
I distilled "lack of agency" as: not rewarding initiative, people afraid to take initiative. the portuguese boss does not like the employee to take initiative, and the employee will not do so. copying existing British designs is "safer" socially speaking, than making new designs.
source: I'm portuguese, I'm a weirdo and people always try to conform me to a box.
Incompatible definitions of fairness. They have in practice a much higher metabolism requiring more pure ingredients, from better sources, it's medically harmful to cut them off like instantly. Although at the same time they contribute to both the problem and solution, like it depends. Turns out very rough to adapt to on short notice, flat-out can't in many cases, and for sure you can't send your kid to any random Cuban school with kids on the other side of a former class divide, from one day to the next? Like how are you going to tell that kid? Just gotta be "really cool", in the "they was cool", sense, and some kids make it and others can't, wretched childhood. Although at the same time Fidel Castro, biographically, grew up among blacks because his father didn't recognize him fully, not even a second son, so he knew it could be done and there was the will that it happen.
And people will price discriminate against that kid forever, never accept he's no longer rich unless he's filthy in rags...that's a rough sketch of it. Misery all of a sudden, and metabolically difficult, like it's not just 2000 calories here's some water with fluoride for your teeth boom done. It wouldn't take your body 24 hours a day if it took a single sentence to summarize like I just did. Water alone, Americans aren't supposed to drink Chilean water or they get diarrhea like automatically, it could be anything, selenium plus manganese in the water table, natural salts (as opposed to NaF) that are systematically removed in America. It's along the same lines as toothpastes in Chile having over 6x the sodium flouride of American toothpastes. Like literally you couldn't buy those same toothpastes in America without a dentist's prescription, I innocently told them 5000 ppm pharmacist looked at me said "No that you need a prescription" like it was opioid that kind of reaction. I was actually prescribed toothpaste weaker than the only strength toothpaste Walmart sells in Chile, it's all 1650, like eating the color white, kids hate it because it's good to hate it because it's bad for you. Counterproductive, makes people become busted and scream at their kids, everyone in the family going to the Walmart to buy cookies. Makes you crave. Gives you ADD, I actually--it turns out--don't have any symptoms of ADD--and I generally have literally every single one and nothing else--when I cut fluoride out of my life. Drank from a well. I actually paid attention, as a verb, for once in my life. Like a colorblind guy seeing blue for the first time. So weird, now I know what people are talking about.
So if you don't want F poisoning, which is exactly what the fuck that's all about for political reasons, there it is again, didn't want this country to turn into another Cuba, Socialist Sandwich as Nixon put it, you flourinate really hard. Breakfast lunch and dinner, inescapable, it's a super expensive subsidy but it's not for your teeth, it's for your brain, it is incapacitating so you don't eg sue or protest. If you know the way around here in Santiago, you'll figure out you have to pay triple at a homeopathic store, the pharmacies don't carry any toothpaste that doesn't F you 1650 ppm. Either you go way out of your way or go without toothpaste, which is a thing for instance in Cuba. Everyone has a hard time adapting to that.
So ...
>I wonder what exactly you mean by this.
I was at a festival last night - the screens by the stage were playing ads in between the acts (that itself is a topic for another day!).
After a cringe-worthy advert for the UK (that I didn't even recognise it was so far fetched), there then appeared a public information message in Portuguese. It said (and I do my best to translate):
"What is the place for a women?" (pause) "Wherever she wants it to be"
Full credit to them for trying to drag themselves into the 21st century, having mostly avoided the 20th - you can see what I'm getting at.
The horror! ;-)
Others have said it before, but mass tourism is the new Dutch disease [1]. Pure tourist cities like Venice are already too affected by it to have a chance of getting back to a normal economic and social life, but there are other cities that are still trying to fight it, like Barcelona. Not sure if there are any political forces in Lisbon or Porto ready to take the same stance.
[1] https://en.wikipedia.org/wiki/Dutch_disease
Who doesn't want to spend 15% of his woke day commuting.
Hard cringe.
Because words have meanings:
refugee
/rɛfjʊˈdʒiː/
noun
a person who has been forced to leave their country in order to escape war, persecution, or natural disaster.
Claiming to be a Brexit refugee when there are millions of actual refugees in Europe is cringey to say the least.
> Supposedly the economy is going to be downgraded from a developed economy to an "emerging market economy".
Anyone claiming that has no right to be taken seriously.
It is a man made disaster, and I left to escape it.
Unlike in Europe. Oh wait.
I've been told that in Germany the gas-saving measures will make people turn down their temperature during winter to 20-21°C from the, supposedly, standard 24-25°C.
But that can't be right, can it?
When I lived in Italy we had below 20°C during winter because the wooden windows from the 70s not replaced since then due to various, not strictly financial reasons, didn't provide much insulation.
Over here in eastern Europe it was always "18°C and put a sweater on".
But yes, generally speaking, people have got used to setting the thermostat higher.
I also see a bright future in Portugal. Many young people that moved out after university want to come back, after making a killing in their career. They might earn less with the move, but you don't need a six digit salary to live very comfortably here.
The market is mostly driven by portuguese government offering low taxes to people retiring in the country.
This won't be sustainable in the long run as all those people retiring now likely got less kids than the previous gen and will gonna die soon. This is a bubble that will pop in the next 20years when the amount of people dying and properties being put on sale will be much greater than people willing to retire there.
Also it is not like all these properties sold didn't benefit portuguese people.
Same (theorized) dynamic. Retired people dying.
The notion seems almost quaint in light of current events.
Quite honestly, apart from the generally increasing gap between rich and the poor, one big problem in societies nowadays is that you can simply get richer and richer just from owning property. For example, if you own three ordinary apartments in Lisbon, you can live in one of them and easily make a good living by renting out the other two as holiday apartments. Because cleaning services, guys who do repairs, etc., are cheap in Portugal, this involves almost no work. Moreover, the net worth of your property will continually increase while you do (almost) nothing. I'm not saying I blame these people, I would do the same if I had the opportunity, but this is a huge structural problem in my opinion.
Portugal should build more housing, which is a simple, effective solution if the rent is too damn high: https://www.theatlantic.com/business/archive/2012/03/the-ren....
The nice thing about indoor space is that we can make pretty much as much of it as we'd like.
"I'd do anything for lower housing prices!"
Build more housing.
"...but I won't do that."
Maybe SF doesn't want to build more housing, but this isn't universal.
The other part is that the same things that make it slower to build more housing also make it more expensive, all the various bureaucratic processes.
Furthermore builders will need to be incentivized appropriately otherwise we'd get an abundance of luxury apartments (higher margins).
https://old.reddit.com/r/yimby/comments/wz3tq0/anything_but_...
This is not some metropolis or even medium city. Quite the opposite.
I guarantee if California said tomorrow, "build what you like on your land, there will be no permits required!" People would flock to build on the land. Whether the dangers of that outweighs the dangers of homelessness and high price families spend on rent that makes healthcare, healthy food, and education less affordable, is an exercise for the reader.
But what that amounts to is, "we could do it, but collectively don't feel like it."
There are all sorts of obvious political fixes to this (repeal prop 13, end single-family zoning, incentivize building mixed-use, mixed-income residences, whatever), but I can't imagine any passing any time soon. Homeowners have all the power, fight all these changes tooth and nail (often through lawsuits against developers on environmental protection grounds) at the local level.
People need to probably drastically limit what they think of when they think of affordable housing. Think multi-family homes where each dwelling supports 4 people and is < 800 sq-feet. 1 bathroom, 1 communal area (w/ small range + table) and 2 bedrooms.
Look to the disposable homes of Japan I guess.
I think the tiny home concept makes sense as it’s trailers without the stigma. But yes, we probably need to think of a new type of town built around small properties that are pre-fab and disposable outside the connecting infrastructure.
I don’t think dense towers are the answer though.
Suppose you see a man strangling himself, and he wants to know how to get out of his predicament. Does he need a VC-backed startup to sell him an anti-strangulation machine? No, he just needs to stop strangling himself! To hell with "innovation".
Land prices in the US (or the UK, or any other place with a housing crisis) are not a limiting factor, if anything they're what would fuel the construction if it were allowed to happen. Property values within cities are so inflated precisely because of the zoning which makes it impossible to build the kind of housing needed to serve the immense demand.
So even if you build multi-family dwellings, the crisis isn’t resolved because the cost of construction, maintenance, and property taxes are out of reach. Unless it is subsidized. The UK is evidence of this. Almost all their housing is multi-family and dense and unit size is small even by European standards. But it’s expensive still. And they keep building.
Japan is a good example of a place where there isn’t a housing crisis and it’s because homes are mainly disposable and very small.
>So even if you build multi-family dwellings, the crisis isn’t resolved because the cost of construction, maintenance, and property taxes are out of reach. Unless it is subsidized. The UK is evidence of this. Almost all their housing is multi-family and dense and unit size is small even by European standards. But it’s expensive still. And they keep building.
No, this is totally, completely wrong, the housing crisis here is not because of materials or labour costs. It is a policy failure: a sluggish, capricious planning system, entrenched NIMBYism and politicians that cave to it, massive legal restrictions on supply, and subsidies to demand. We aren't building enough, there is a massive shortfall in housing supply.
See this thread: https://nitter.net/AntBreach/status/1121362679367598080
six weeks. People were moving in three months after breaking ground.
The challenge is nearly always political in nature: a lot of vested interests want to go out of their way to make it harder to build more housing.
https://www.macrotrends.net/cities/23014/houston/population
They have also managed this with affordable housing.
That's something to learn from.
Texas has allowed lots of houses to be built. It's perfectly doable. CA did it until the 1980s.
Check out Arbitrary Lines by Nolan Gray for how Zoning stops people building houses.
https://www.goodreads.com/book/show/59613917-arbitrary-lines
What? Have you ever been in Lisbon? The city is pretty dense as it is. You could mostly just build higher, and that has its limits too, depending on the structure and foundation.
Adding more housing outside the core of the city might not be attractive enough. And increasing the density of people also means you need to increase the density of services (public and private) and utilities, which also comes with its own problem.
There are other decent metropolises in Portugal and other fun spots around the country not to get crammed in the capital.
People can work from nearby towns where housing costs are relatively moderate and just hit the head office in Lisbon one or two times a week.
Corporations and people need to adapt to the changing circumstances and to be open to make the necessary adjustments to advance in this world.
This is the exact way that janitors and baristas and everyone servicing those 100k+ a year software engineers is priced out.
Took a train to Sintra, there were endless and endless 6 story-miles long buildings forever. Portugal seems insanely dense.
Lisbon: 6,452/km2
Barcelona: 16,000/km2
NYC: 25,000+/km2 (depends on the source)
Lower East Side NYC: 33,600/km2 - due to zoning regs, there are very few buildings over 9 stories... but every building is 9 stories!
Lower East Side NYC 1910: 144,000+/km2 - visit https://www.tenement.org/ to learn more.
Kowloon Walled City, 1970s: ~2M/km2 !!! - inspiring 1000s of dystopian Sci Fi stories from Akira to Blade Runner. https://www.google.com/search?q=Kowloon+Walled+City
http://demographia.com/db-nyc-sector1800.htm
25,000/km2
It’s pretty quiet too! :)
Lisbon: 100.05 km^2 , 544k people
San Francisco: 121.48 km^2, 873k people
20% more room than Lisbon, 60% more people.
Or if they're crazy enough to want to keep these old buildings they could just build all the skycrapers in the park surrounding peak Monsanto, easy.
/s
Historical buildings are nice, but for apartment blocks at least, yes, the priority has to be actually housing people. You can always require historical-looking facades if looks are a concern.
I assume you have actually seen the inside of old buildings with your own eyes.
In no way is the look & feel of the inside of an old building comparable to a modern one.
Yes, old buildings sure have downsides. But pretending nobody looses anything when you only keep historical (or even just historical looking) facades is eyewash.
I bet there are ways for the Portuguese Gvt to encourage renovation of all the dilapidated old style buildings instead of encouraging speculators to wait for them to collapse so they can build new and cheap and with loosing every bit of charm a building can have.
It might be the _right_ solution, but if it failed to be adopted for so long it can't be that simple, isn't it ?
They are an active party, so you can’t just say “it works, but only if these people don’t exist”. This means the “simple” solution only applies to an imaginary world, and an actual solution requires a lot more thought and adjustment to accommodate for the reality of the problem.
This is just the dark side of globalism cheered by Portuguese politics for decades. Competition is global now. Local middle class is having their lunch eaten by foreign rich people or even middle classes from wealthier countries while the unrestricted influx of emmigrants from poorer countries keep sallaries down.
Suck it up and enjoy.
How do you arrive to that conclusion?
- If you built 100 million new houses in Lisbon, would prices fall?
- If you built 10 million new houses in Lisbon, would prices fall?
- If you built 1 million new houses in Lisbon, would prices fall?
- If you built 100k new houses in Lisbon, would prices fall?
- If you built 10k new houses in Lisbon, would prices fall?
- If you built 1k new houses in Lisbon, would prices fall?
Even if you have a model that says that building more houses raises prices for some number of houses, surely increasing the number will eventually make prices fall, wouldn't you agree?
Where is that number? Shouldn't the discussion about how big is that number, and how to achieve building that many houses?
"Supply increses lead to price increases" is a pretty extraordinary claim, and the only charitable interpretation of it is with the addition of "up to a point". Where is that point? Why not make the charitable interpretation yourself that people recommending more housing are recommending more housing past the price increase point?
To be clear, I don't believe that the supply/price curve is anything but sloping downwards, but even if your one does have a hump, being against housing still sounds like a bad conclusion.
Globalization is inevitable. What I don't buy is the rate of change, it _must_ be smooth or the system may implode. Blind and raw globalization is just a way to feed the nationalisms that most people are afraid of.
Anyway, the problems is not so much that there is not enough housing, but that it is on the wrong place.
https://www.architectmagazine.com/practice/how-to-fight-weal...
The exact same concepts: cheap grandfathered lease, hoping the landlord doesn’t cancel, can’t afford rent despite making >100k, “luxury apartments”, empty apartments, illegal renting (e.g. AirBnB) and shadiness.
Tenant protection is good, but it breaks down in high-demand situations. And of course the better solution is to solve this on the supply side
Lack of housing suits most people in power perfectly well. They get to control the populace through sops like the aborted rent control law Mietendeckel.
Or to put it in reverse - I am not aware of any metropolis/capital where this isn't true, regardless of regime.
I mean, tendency is that most people want to live in the big city, sometimes as necessity (can only find a job there) sometimes as a preference (better services, etc.) the result is traffic jams and expensive real state.
Quality of life issues eventually drive people to live in the outer suburbs, further exacerbating issues within city cores (e.g. San Francisco right now).
Also, white flight in the 60s was a move to the suburbs- many would consider that given the density of 2020, the suburbs are feeling the same crunch. Bellevue and other suburbs are more expensive than Seattle. I’m guessing there are suburbs of SF that are more expensive than SF.
And you yourself said "Bellevue and other suburbs are more expensive than Seattle." Which would infer that yes, people are leaving the city and moving to suburbs.
My statement the cycle of movement to urban centers might be reversing, and I used condo prices in SF since pre-Covid as a data point.
You come back with “its still one of the most expensive places in the world”. Then you said “Be a big boy”.
You’ve failed to make your case and resorted to condescending remarks.
Let’s just chalk this up to you failed to disprove my argument and leave it at that? Unless you had more condescending statements to make?
Tokyo. It is hoovering up all the Japanese youth, but manages to stay affordable for other factors.
- Permissive zoning - Immigration restrictions - Closed culture - Declining population
Public transit is constantly being expanded and there is so much stock of modern buildings, I can’t see it changing any time soon.
Last week I went to the fish market by Sky Train, first time I’d been out that way, and I was surprised to see a ton of modern condo towers clustered around Erawan. And why not? It’s 30-45 minutes on the train to the center of town.
Compared to months of planning and looking if you plan to move in an European city.
We are currently in the "denial" phase. We can't get to "acceptance" fast enough.
And adjusting to what exactly? Living in squalor way outside of what you call home because some parasite gets to live in a furnished and unaffordable temp home, payed for by a relocation package?
If 10 people with $1 to spend on an apple, and one person suddenly had $11 you could say demand for apples had "doubled", implying that this the result of an implacable, impersonal, unchangeable force but it absolutely isnt.
That guy with $11 just needs to lose most of it or not be able to spend it and then there is no more apples shortage "due to high demand".
Portugal cant tax an overly rich canadian living in canada but they can absolutely cut the bottom out of the portuguese-property-market-as-a-bitcoin-like-store-of-wealth. This would not only free up land for portuguese habitation it would help fill the portuguese budget hole.
However, for some reason that is probably more about a variety of property owning portuguese politicians getting very rich and not attracting useful investment, the Portuguese government encouraged this with the golden visa. They only cut porto and lisbon out of the program after a steep backlash.
If you want to decrease unemployment, you add tariffs for imports enabling more businesses to open domestically (i.e. tariffs effectively increase import costs).
Similarly, you can loosen building codes to increase production of homes, limit visa duration, require citizenship for home ownership, etc. Those are some obvious fixes, why is the government not doing it?
Beyond the obvious potential fixes, all EU countries are facing the same issue:
- supporting immigrants (high level of immigration)
- no controls over ones border(s) (anyone can move between EU countries)
- over regulation and too many social programs (reducing peoples willingness to work & increasing burden on the current tax base)
- over regulation of industry and farming has left the only option to survive being to work in a city (as an example, see nitrogen reduction regulations in the Netherlands)
It's all "give-and-take" you have to decide how you want to live... To me it sounds like the EU is hitting a critical state, but is there a will to make the tough calls yet?
* depends on how you define "high" levels of migration, but few EU countries fit that. Portugal does, because they explicitly encourage it. Why? Nothing to do with the EU, they're trying to fight negative population growth.
* social programs aren't an EU thing, they're purely local. And the "too much social spending makes people not want to work" ia such bullshit.
* there are more local regulations than EU regulations. Which ones specifically are you referring to as too much?
* farming is explicitly subsidised to make it profitable. What are you talking about?
* not everyone can move between EU countries, you need to be a citizen. Like the Portuguese that have moved all around (e.g. there are probably millions of people of Portuguese descent in France)
It's annoying how popular empty nationalistic populists have gotten. Can't nobody bother to fact check their bullshit?
(We could now add the Satre quote, or Hannah Arendt, or any number of people who've written about this. The popularity of the feel-good lie is well-inspected.)
Portugal's working age population is declining[1] while its 60-plus population is increasing.[2]
Old people own most of the real estate and don't care much about workers. They also tend not to like change, which immigrants bring. So they dislike immigrants despite depending on them.
(//TODO: find papers supporting these assertions: they're factoids of the "everyone knows" type.)
1. https://population.un.org/wpp/Graphs/Probabilistic/POP/15-64...
2. https://population.un.org/wpp/Graphs/Probabilistic/POP/60plu...
"Boomers don't like immigrants/workers, therefore life is getting really expensive" doesn't really sound like good reasoning.
If the population is shrinking, demographics doesn't explain it by itself. Housing should be getting cheaper if there are less people competing for it. There must be another factor here.
As with all wealthy countries, household size has fallen in Portugal over the past few decades, so the same amount of people needs more house. This is especially true in the context of empty nest retirees.
I'd still like the GP to connect the dots for me on his "it's all demographics" argument. It sounds like are argument you hear on Reddit.
For example, when my siblings were kids we all lived in 1 house. I have 3 siblings so there were 6 of us including my parents. In 1 house.
As we graduated from college we moved out. Now there were 6 of us in 5 houses.
Beyond the raw house count, you're going to need more space. Multi-bedroom homes have shared common space. The house we grew up in had 1 dining room, 1 kitchen, 1 living room, 4 bedrooms, and 2 bathrooms.
If we each moved out on our own, we now needed a minimum of 5 dining rooms, 5 kitchens, 5 living rooms, 5 bedrooms, and 5 bathrooms.
The number of people is the same. Still just 6. But we needed more housing and more space since we didn't share common space anymore. We didn't expect more than we had before (well, beyond the practicalities - it's difficult to share a bathroom with someone you don't live with), we expected the same as we had before we moved out.
Growing up (middle-class; both parents were teachers), we used our dining room to eat maybe 3 times a year. We ate around 1000 meals/year at the kitchen table and maybe 3 at the dining room table.
I am also going to echo what was said earlier: dining rooms are not a necessity. They are mainly intended for people who entertain guests. Many apartments and smaller family homes don't even include a dining room, since the expectation is that people will eat in the kitchen.
In any case, censuses define a household as people living together in a unit, which would account for roommates. Portugal has gone from 3.7 in 1960 to 2.6 in 2011. Housing 10.3M people at 3.7 requires 2.8m units; 2.6 requires 4m units. And that may be just what Portuguese people have to put up with, but not their desired end state; if they were at the EU average of 2.2, then it would require 4.6m units.
I think that your thrust was that smaller average household sizes means more dwellings are required. This is a good point.
Shrinking average household sizes could be explained by the shrinking size of the average family, or it could be explained by shifting expectations, by people wanting more.
If you take a population where all single people are willing to live in share houses, your average size of your household goes up. If all the single people expect to live in their own apartment because they want their own space, own bathroom/kitchen, then this would drive down the average household size.
I would expect both of these dynamics to be at play here. Average family sizes are decreasing in most developed countries. People's expectations have also risen with regards to housing.
I wonder what effect each has on the demand for housing in Portugal?
BTW: Your personal example is possibly a good example of shifting expectations in society, whether you recognise it or not. Every sibling moved into a place by themselves? Did no one move into a sharehouse? I probably do not live in the same country as you, but it used to be in my country that when you first move out of home it is not the norm to live by yourself. What's the norm these days?
(Disclaimer, I'm American, so can't speak directly about the Portuguese experience.) But as an example, at this point I don't remember the last time I saw a bunk bed in a non-dorm room setting. This used to be extremely common in low-income housing in particular [1] but as an example I have never, ever seen anyone share a bunk bed with a stranger.
One other effect is location, location, location. In Lisbon in particular, like most European cities there is generally a height limit imposed on most of the city (higher than most places in the US, but not so high that tall buildings are allowed). There is only ten buildings above 80 meters in all of Portugal. If your building is so short, there is only going to be so many ways to subdivide it before you can't split it more to accommodate people.
---
[1] - a historical photo of an NYC tenement: https://media.gettyimages.com/id/640482741/photo/bunkrooms-i...
Or, in the case of "world cities" like London, wealthy (nearly all old) people from shaky and shady regimes around the world buy them as places to escape to if need be.
As well as falling household size in occupied dwellings, the proportion of unoccupied dwellings in these cities increases far above the percentage normal for the delays inherent in ordinary buying and selling.
IIRC Paris is attempting to combat this with a surtax on dwellings unoccupied for long periods.
The fully elaborated argument is long and somewhat nuanced. If you want a soundbite, how's this: "Boomers own all the stuff (to a first approximation). Two other things: first, due to their wealth they can outbid Zoomers for real estate as it comes onto the market. (Having someone live in the proprty is entirely optional.) Second, boomers are adept at protecting their wealth by keeping real estate scarce and taxes on real estate negligible, as they have always been."
Or: people are not competing for houses, piles of money are. The bigger piles are winning.
Edit to add: Demographics comes into it because the Boomers are the first generation in history to be so economically significant in their old age.
Before the boomers, life expectancy was about the same as retirement age, or younger. Houses passed on to the next generation much sooner in their life cycle, often as they were just starting to have children of their own. Now, children can themselves be retired before parents die and leave them the house. Often, perhaps usually, are, these days.
The market weakness of new-household-forming adults (the 18-49 age group) is one consequence.
We are in uncharted territory, demographically, this century.
Just think about it for a second, we in the west allow people to buy a piece of the Planet Earth, and hold on to it forever, virtually tax free(in Western Europe at least).
How is this nothing else but blatant feudalism? And how is it still allowed? Royal families and landlords were beheaded in the past by angry mobs over abusing this system for their personal gain.
Why don't we have taxes or a system in place to prevent this accumulation of land by those who got in the game early? Why can't we just lease land instead of allowing land ownership in perpetuity? Like, "this land is leased to you/your family for the next 100 years, after that it goes on to the market again where your offspring will have the chance to lease it again if they wish at the future market rate". Something like that, as our current system is basically a zero sum game which just encourages land hoarding through inheritance.
Those who's families go cheap land for peanuts ~100 years ago, are now leveraged to acquire even more of it while those born now without family wealth have no leverage to buy anything. Insane!
Imagine you have to start paying Monopoly from square one, while others get to continue where their parents left off. How is this fair? Why don't we have a system that resets this real-estate monopoly board every generation or so?
With our current ways, instead of creating a system that rewards individuals through hard work and innovation that contribute to society and human-kind, we're creating a system that encourages asset hoarding and rent-seeking that contribute nothing to humanity, rapidly going back to feudalism, where a few landlords, both corporate and private, will own all of the available land, and most of the people will be serfs for life, without the chance of ever owning anything, no matter how hard they work.
So, again, why do we allow people to own pieces of Planet Earth in perpetuity, virtually tax free?
Because the moment anyone mentions this, they get bombarded with "think of the poor old people who sit on a big house! They worked hard for it!"
We as a society have a tendency to prefer leaving lucky people as is while the remainder fights for the scraps. Why this is, no clue. Beyond voting being in favor of those already owning homes (too fractured to oppose grandfathering politically), I come across this attitude among the young way too often. It doesn't take a genius to realize sharing less with more will cause people to go hungry eventually.
Those same young people are all pro-grandfathering until they realize the bottleneck bites their life goals at age 30 and beyond. By then its too late, many of them stop caring as they become part of homeowners, and the cycle continues.
What do you mean tax free? There are inheritance taxes for that, which often go up to 50-60% of the value for higher values. That's why the majority of castles in the UK are in trusts and open to the public, paying 50% of the value of the castle and land every generation was too much.
And the property taxes are mostly grandfathered to the price the property was last purchased at, rather than at the current market prices.
> like donating your property to your kids before you die to avoid the inheritance process and taxes.
Donation to family members (above a certain sum, but any property would qualify) is taxed just like any other income.
> And the property taxes are mostly grandfathered to the price the property was last purchased at, rather than at the current market prices.
Property taxes are set at the current market prices (and if the gov thinks the value is set too low, they will come back and ask for more, retroactively).
Lisbon's local government is renowned for being the largest property owner in the country, with over 60% of Lisbon's real estate owned by the city.
I'm from Lisboa and this can't be true unless you're using some very strange definition of real estate. What's your source for this?
It's fascinating how subjective dimensions of reality have the appearance of being objective, and how this seems to be increasing over time.
Portugal eases visa rules to tackle labour shortage
https://www.swissinfo.ch/eng/portugal-eases-visa-rules-to-ta...
> "Portugal's unemployment rate is at 5.7%, near a record low.
Employers' confederations have been asking for the immigration rules to be streamlined, pointing to an economic situation close to full employment"
The narrative of unemployment in Portugal driving dissatisfaction across the population is very tenuous in light of these latest developments and policies
They just to lower the wages. Hence why they are so in favor of opening the borders and human traffic situations like we had in Odemira with people from Nepal and neighboring countries living like literal slaves.
Even with visa deals for Portuguese speaking countries like Brasil, Angola and Mozambique just have that goal in mind, because it's not like we are getting scientists, doctors and engineers from those places...
> If you want to decrease unemployment, you add tariffs for imports enabling more businesses to open domestically (i.e. tariffs effectively increase import costs).
Unless your domestic business requires imported goods to run its business. Then you've just increased costs for your domestic industry.
alot of these things used to be regulated, discouraged or prohibited, but with deregulation of much of finance more and more wealth is generated from speculation, rents and leverage... if people can make money passively from doing nothing but owning something (real or virtual) there is less motivation for "real productive work" and squeezes out the rest of the economy.
this compounds over time and get the results you see today: high land costs, rents, inflation etc.
blocking immigration or adding tariffs etc will do nothing to stop any that....
So if you increase supply and then people get bigger homes, etc..., until prices reach an equilibrium, then as long as rents exceed maintenance costs and land doesn't depreciate, you have a leverage (read: financialization) opportunity.
Then prices rise again until you do something else, and eventually you approach infrastructure scaling limits.
We should vastly reduce cattle numbers globally actually.
Maybe a lower population -> lower housing prices -> easier to start a family will cause some sort of equilibrium.
That's not how real estate pricing works in the real world capitalism. Germany's population has been on decline for ~30 years due to demographics, yet housing has been getting more and more expensive, far outpacing wage growth in the last few decades, especially after the QE bull run from ~2013, so much so that owning your home is impossible for the average German.
Why is that you wonder? That's not how free market economy should work right? If now there is less demand for a good due to population shrinkage, then prices should come down right?
Well, that's because housing is not a good, it's a speculative investment asset, so as soon as people die and are not replaced, their free houses don't magically end up in the hands of those who would need them the most to buy at a discount, but end up on the "free market" being bough by existing rich home owners, investors, speculators and publicly listed real-estate conglomerates, using their existing assets and capital as leverage to buy even more houses for their investment portfolio. And governments and banks have ensure the policies to make sure this asset keeps going up, up, up.
When housing is an investment vehicle, then it can never be affordable, regardless of the population decline.
Like a commenter above said, which explains why home prices are not coming down despite population shrinkage: "people are not competing for houses, piles of money are. The bigger piles are winning."
The thing is – within that time frame it hasn't, actually. There have been some years with slight decreases, but those have been balanced by other years with increases, and compared to 1990 population is actually definitively slightly up (83.2 millions last year vs. 79.8 millions). Combined with a decreasing average household size (2.27 in 1991 vs 1.99 in 2019) and internal migration those things by themselves will probably generate enough pressure on the housing markets in and around the prospering parts of the country, even without any added financial shenanigans on top.
Fix those first so we can have a stable income and affordable housing from a young age, and then we'll take off the condoms.
But blaming the poor young people priced out of their own country for not breeding, and just bringing third world immigrants with no living standards, is much easier than improving the living standards of your own population.
As long as you treat housing like a speculative investment that is squeezing the young to get a much larger return for the older owners, instead of treating it like shelter and a basic necessity for any family, why are you surprised young people don't breed anymore? The precarious job market isn't doing them any favors either.
Mass migration that puts more pressure on affordable housing and on the low-end jobs market is not the solution here. That breeds long term instability, segregation, distrust, and leads to political extremism. The solution is fixing housing, which nobody actually wants to do, because "housing prices must go UP", and the ruling asset owning class is making a killing from it.
Guarantee all parents affordable child care close to their work or home and many people settling for one kid will have two.
Sweden has that (and generous parental leave policies) and still has both low and declining birth rates.
Yeah and why is that? Is it because the young are now competing in a zero-sum capitalism squid-game economy, where good jobs are scarce and super stressful to get, requiring you to grind away the most fertile years of your life, and that lawmakers, banks, speculators, foreign buyers and NIMBY boomers have made owning a family home completely unaffordable for the young in most cities with jobs, giving young people too much anxiety about starting a family?
No, it must be porn, hookup dating apps, and all that damn avocado toast to blame. /s
>It has to allow immigration for its survival.
Here's a wild idea: Instead of imposing mass migration from the third world on everyone, you first try, <inhales_deeply>, MAKING HOUSING SUPER AFFORDABLE, and watch young people breed like rabbits?
I'm from a ex-communist country and during those days population was monstrously booming, because, even though young people could not afford modern luxuries like iPhones, cars, TVs, consoles, oranges, bananas, washing machines, Adidas shoes and tracksuits, fancy cafes, they didn't have to worry about the main things that give young people anxiety about starting a family today: jobs, housing and childcare. The state would provide families with all of those necessities. I'm not saying communism is the solution, it's not, but it turns out that most humans have very simple needs in life (we're still animals at the end of the day), and as long as the need for food(jobs), safe shelter(housing) and childcare are covered, they'll solve the need for sex on their own and breed like crazy without having any modern luxuries.
So why are we surprised Europeans aren't breeding anymore when those basic needs have been intentionally made very difficult for them to get in the name of profit, and instead we push third world immigration as a the solution to replace them?
Both are unlikely explanations given inverse GDP per capita and birth rate correlation: https://en.wikipedia.org/wiki/Income_and_fertility
More plausible explanation - many people don't like children and want to live for themselves but in poor/developing countries they have to 'invest' into children so they will take care of parents later. In countries with more or less stable economy people can rely on own investments or state pensions to not face extreme poverty after retirement.
I have to call Grade-A bullshit on your comment.
At best, nationalist political movements take advantage of sticking points with their highly opportunistic, ideologically incoherent and empty promises hoping to buy arguments while pinning the blame of everything on whoever is the incumbent at the time.
Portugal used to even have a negative net migration rate and suffers a labor shortage. Right now, the net migration rate is positive and low at around 0.5. That's a good trend, but there is still too much emigration of skilled Portuguese people due to weak economy and structural problems.
The problem is not immigration, the problem is that wealth is distributed very unevenly. Average salaries are low in Portugal, many people have to do with very low salaries and few people in Lisbon and Porto make a lot of money. Although it luckily went down from nearly 0.4, the Gini index in Portugal is still relatively high for a Western European country at 0.33. This wealth disparity in combination with laws and politics that favor landlords, property speculation, and building hotels instead of apartment buildings lead to the housing crisis.
This is very simplistic. You first start building local expertise/domestic businesses and then increase tariffs to wean off imports. Don't put the cart before the horse.
What’s propping all of these property prices up? Supply and demand rules don’t seem to apply at all. You might have thousands of empty apartments in a city yet the price only keeps going up.
Everything is broken, but housing is particularly broken.
Money printing, first and foremost
The alternative of a mineral backed currency that can’t adjust with population levels and is inherently deflationary we know to be far worse.
I’m not even sure if this Globalization was worth all that much. It’s made some people very wealthy, some people well-off, but its also made lots of people very poor and very angry.
I’m okay with living in a world with fewer millionaires but also fewer people sleeping on the streets.
It was an interesting argument that globalization was an American security development not an international economic development.
Did you mean billionaires? Because a million isn't what it used to be...
Smaller cities and towns are cheap. I've seen government auctions selling apartments for under €5000 which nobody wants. Why? Because people are moving to larger cities. People want opportunities, and the idea of working in some chicken factory (which may have been a perfectly respected career for our parents) is not appealing for the current generation. And the problem in these small towns, is the chicken factory is really the only career prospect you have, so people move elsewhere.
Of course there are rich foreigners buying apartments as investments and renting them on Airbnb, but that's a very small percentage of the housing market. And even if they rented them normally, they'd still be asking for prices that are unaffordable for the average person. I know that because that was me, I emigrated here and bought a luxury apartment and lived in it for 7 years (paying taxes) and now want to rent it out as I moved outside the city.
Unless I rent or sell it for much lower than the market rate, even on the lower end it's still too expensive for the average person. If I sell it, it's probably just going to be poached by someone who will use it as an investment and put it on Airbnb.
My city is building a lot of new developments, but space is limited as young people want to live close to the city center, not somewhere 30 minutes drive away. That is driving up the average price, so you end up with studio apartments costing upwards of €4000/m2, which you need to earn at least €2500/mo to afford, which is well above the average salary. With rising inflation the problem isn't so much people can't afford the mortgage payments (which are slightly lower than renting), but they can't afford to save the 15% needed for a deposit.
A planet full of empty "luxury apartments" and most of us homeless?
There will soon come a time where revolt is no longer possible.
If you are becoming a tourist hub, then create an off-town tourist area and add a convenient transit line/people mover to the central parts of town. Tourists get reasonable housing, locals don't get displaced and the influx of population does not destroy the cultural vibe of your town.
Prohibition never works, and piracy is a reflection of an unmet need. Banning things merely airs out open wounds, and leads to grey-markets such as shady uber/airbnb equivalents within the city. If you want to reduce abortions, banning merely leads to riskier abortions. Examples of this are dime a dozen.
When demand arrives, the cities MUST adjust to incoming demand. Couple examples of working uncomfortable compromises are: 1. Paris - Choose a small district and allow it to go full skyscraper. The rest of the town maintains its architectural identity. 2. Barcelona - Go full superblock. Means that tourist activity gets neatly distributed across the city (removing bottlenecks) and tourists do not lead to increase in car traffic.
I could go on and on, but 1 fundamental truth stays. Bottlenecks only help those who control access to it. The key is to eliminate the bottleneck (more housing). Band-aids (rent-control) or equitable distribution of bottleneck gains (no-renters->only-homeowners/ more single-family-housing) never works. It only leads to the situation festering (see Bay Area / SF), and makes for an even harder problem in the future.
I'm not sure if my comment conveys any cohesive point, but I hope folks get something out of it.
p.s: fuck NIMBYs
This famous article discusses why housing is becoming a huge problem everywhere and why that's super bad for the economy: https://www.worksinprogress.co/issue/the-housing-theory-of-e.... It's been discussed here a few times, e.g.: https://news.ycombinator.com/item?id=28531025.
The compromise Barcelona made is not enough. Sadly, that beautiful city is IMHO the prototypical case of getting ruined by too much tourism.
In their defense, I think it's safe to state all mid-to-large cities in EU are quite crowded and unaffordable. For example, Copenhagen used to be a place where citizens enjoyed great purchasing power. Despite rent control and sale taxes, a single person in a well-paying job can hardly afford a mortgage for a decent flat right now. The same can be said of Munich, Madrid, London and many, many other places.
In practice, it's a free market and landlords have by no means been discouraged to offer flats.
Hotels are usually limited because they are unpleasant neighbors for actual residents. It’s not really a surprise that’s the main issue people have with AirBnB rentals.
What do you mean by "works"? Yes, grey markets will pop up, but if Portugal banned AirBnB style renting that the market for that housing wouldn't shrink?
It seems to me that prohibition might be a useful tool in a more comprehensive set of policies to address the problem.
How much control is happening, no idea, probably none as usual.
You could also make laws to limit the number of properties per person, and if you're even smarter, you could use that in conjunction with a map of relationships between people, so you could limit the number of people putting listings in their family members names to get around any limitations.
AirBnB has the data to assist governments.
Airbnb will probably follow your law, but other platforms that do not will flourish. They will be difficult to regulate, given that they won't be in your jurisdiction.
> You could also make laws to limit the number of properties per person.
Many laws already exist that give unfavourable tax treatment to second and subsequent properties. They are widely avoided through family members and legal entity structures and a hand-wavy "map of relationships between people" isn't going to magically fix that. This would also have a fairly obvious negative effect: it would artificially limit supply in the rental market, driving up prices. A person who could have invested in multiple properties and supplied them to the rental market will instead supply at most one, and invest the rest of their money elsewhere.
There isn't some nefarious conspiracy preventing effective regulation in this area. It's just a legitimately hard problem.
At least that is how remember how bad it used to be.
Take Amsterdam for example.
A good decade ago, it was crowded in the tourism months (summer), but not too bad. Now it's crowded in the off season too, and during the summer months even more so, to the point where walking around is really hard.
The mayor seems to constantly want to get rid of cannabis, which won't solve the problem, the issue isn't the weed tourism... it's the unfettered tourism.
These things can be controlled, you can control how much tourists you have by limiting the amount of hotels you have in your city. But with AirBnB you lose all control on how many tourists.
https://www.airbnb.com/help/article/860/amsterdam
The old wooden buildings where one could hear everything, people arriving and talking loudly in the stairwells then banging their suitcases up the stairs etc.
We left, couldn't deal wit it.
If you just add housing, isn't it possible that the effect is like adding roads to prevent traffic congestion? The number of people coming in just increases even more until the marginal attractiveness is the same. From the point of view of locals this means that there are even more outsiders, and the affordability is just as bad.
Or would you propose strict accompanying zoning laws with strict enforcement? I think that would meet stiff resistance from property owners but would be feasible. I do think all of this would make the destination much less attractive to visit though so it really comes down to how much you want/need the tourists.
I'm a bit conflicted on this. I definitely see what you're saying (and often repeat it myself).
But it should be noted: property is simply an asset like any other. If there's easy and outsized returns to be had, the demand for this asset would increase, pushing up the price to the point that the returns on the asset are in line with returns of other assets which have similar risk/effort profiles.
To say that one can make money 'doing nothing' owning any asset (that has a positive return) is true. But that's not per se some kind of economic or political problem, it's a normal feature.
Of course to absolutely do nothing and still earn enough to live off of, means you must have earned enough money to purchase a large amount of assets. Supposing rental income of 5%, and supposing rent is 25% of someone's wages, and supposing a 20% tax rate on your returns, you'd essentially need to purchase assets worth 100 times what someone spends on rent.
(ex: if you need 40k to live on, spend 25% or 10k on rent, you'd need 100x that or 1 million returning a 5% return that's taxed 20%, leaving 40k in net income.)
Amassing 100x your rent is no easy feat, and in fact it means that someway, somehow, you've provided 100x your rent in value, without spending a penny of it, and saved it all, then poured it into an asset (incurring risk and requiring some level of commercial effort), and then, yes, you could start to approach doing 'nothing'.
For many that's a life's worth of work. Buying such assets is really no different from putting in an equivalent amount of money into a retirement fund, and that fund in turn buying assets like companies. Whether it's companies that buy and rent out cars, or real estate, or produce and sell, the people owning these enterprises through their retirement fund are 'doing nothing' while others are working.
But the important part to note is that anyone has access to this system. Every person can, proportionate to their income (based on their economic value to society) buy assets.
In fact, I'm able with a click of the button not to just buy a part of a in Portugal, but rather the biggest and most successful company on the planet: Apple. I can buy a small part in it, and profit when many of the planet's smartest and most educated people build & sell some of the most cutting edge consumer technology day in day out. Whilst doing: nothing.
So I don't really see a structural problem with this system. What is problematic is the stuff around it. For example, in some countries real estate goes untaxed and is subsidised, and is bailed out when things go bad. Subsidised private profits, and socialised public losses. It's unfair and a failure of markets and governance. Another example is that swathes of people indeed inherit value to the point they've never done any contribution to the world to get into a position to 'do nothing', rather than work to retire off of the fruits of their labour, they could in effect retire from work before ever even starting. This is where the system breaks down and must be balanced, again by e.g. taxing inheritance and balancing things out.
Finally, markets work when price & profit signals can balance supply & demand. If there is a shortage of bread, demand outpaces supply, the price rises, and overnight new bakeries will pop up bringing down the price. In real estate high prices often do not trigger new supply in many countries, either due to geographical limitations (e.g. the mountains of Taiwan limiting buildable space, or simply the fact physically t...
> So I don't really see a structural problem with this system.
This is the disconnect. Residential real estate is fundamentally different than owning stock, in that people need a place to live and building residential construction is much more difficult than issuing stock. When wealthy people from abroad buy multiple apartment buildings in desirable cities, and then proceed to keep living elsewhere (probably in a different residence in another desirable city) they create a problem that in no way resembles the result of buying stock in a company.
I agree that buying housing stock and leaving it empty is an issue. But they're not the cause of all the housing issues, in most cases they're a tiny fraction of the problem. Most cities have vacancy rates of just a couple percent. Given the average person in a big city moves every 4 years and a home is empty for 1 month inbetween tenants/owners, you'd already have 2% permanent vacancy rates. Most cities have vacancy rates of 3-4%, Lisbon has 5%. It's definitely stupid to allow high vacancy rates and most cities have laws against them (here in Amsterdam you get fined for leaving your house empty), but even shaving off 1 or 2% off the vacancy rates isn't solving the housing problem. It very often features in newspaper articles because it's a clickbait story: rich person buys home and leaves it empty. Again, it's stupid and we should expand laws against it, but solving it still keeps 99% of the issues with housing which have nothing to do with this phenomenon.
And this phenomenon is limited precisely because housing is a market, and from a financial perspective it's a stupid idea to buy an asset and forgo its use or its returns.
Beyond that, nothing that I noted about assets has a disconnect because everyone else owning housing simply rents it out at the market rate, which is both the most expensive but also the cheapest marginal price to provide an extra unit of housing, which is the same for any asset and there's no real disconnect here.
Progressively tax the shit out of each subsequent property owned. Prevent foreign/corporate ownership of property outside of short stay, hotel/motel type accommodation.
Make shelter an extremely unattractive asset to own.
Unfortunately, many politicians across the world are also landlords.
I don't think "basic need" is a good argument, as many other things are basic needs but function perfectly fine in a market-based system. This perspective sounds moral, but proposes nothing to actually resolve the problem (other than to advantage a particular section of the population at the expense of another - namely, people who would like to be homeowners). I note that most such proposals make no allowances for people who would like to rent - because they don't actually care about anyone other than themselves; they want to own a home, ideally at a low price, in a good location, with good services, on a large block.
Food is also a basic need, but does not get any of the attention because it is a functioning market.
In many places, property is not a very functional market, as suppliers (developers) are unable to respond to demand thanks to regulations/zoning.
If bread and milk were being hoarded by speculators (not some random luxury like truffles) you'd be hearing exactly the same discussion.
The point is that rich people with vested interests are stacking the deck against newcomers.
>market-based system
The free market does not exist. Property markets around the world are being heavily distorted through favourable tax treatment and speculators.
>other than to advantage a particular section of the population at the expense of another
This is business as usual, except that the advantage almost always flows the other way.
We'll see how that plays out in the coming year.
Lots of revolutions in history have been triggered by unaffordability of food, and step 1 of the classic formula for keeping people happy is food ("Bread and circuses")
I firmly believe that most investors are chasing capital gains as yields at current prices (even with extortionate rents) are mostly a joke. It's bad enough that some speculators don't even bother renting out their property.
A widespread residential property market crash would be painful but looks like the most likely outcome and solution. I'm hopeful that as interest rates rise capital gains will diminish, disappear, or even go backwards. Indications are that this is already underway in many places.
You'd feel at home in LA.
I've seen this trend here for at least a decade now. I know some people who say that the construction of these luxury apartments is a sign that the economy is recovering, but I remain skeptical. These places are the least lived-in looking apartment complexes I've ever seen in my life. There's one down the street from where I live that was completed around 5 years ago, and I would bet good money that most of it is vacant. I rarely see people going to and from it, besides the occasional few who visit the burger bar right in front of it. Too many of the balconies look sterile.
I don't know why so many of these are being built outside of LA proper, but I have a theory for why there are these massive complexes being built; the rich have spoiled children they no longer want to deal with so mommy and daddy pay for these apartments to house them. I used to deliver food to these places and, without fail, I was delivering to men and women who appeared way too young to afford such places.
> I live in Lisbon as a foreigner for more than 12 years now. We pay a rent for a small flat that used to be very expensive … Rents in the city have skyrocketed, we'd have a hard time finding anything
I know this comment won’t be received well, but aren’t you describing gentrification & how you participated (maybe unknowingly) in what has caused prices to skyrocket. And you’re now complaining because someone even more rich than you has caused prices to exceed your means, just like you did to a local person when you moved in as a foreigner.
I also do not understand how the second sentence and the last aren't a direct contradiction of each other.
A country should focus on its citizens first, foreigners second.
Then again EU is an unique experiment as it is.
People move around. Some cities grow, others shrink. New jobs get created, old jobs disappear. Some housing gets more expensive, some housing gets cheaper. Some cities get wealthier, others get poorer.
We'd still be living in caves if our goal was to forever keep all cities and towns the exact same way they've always been. Which is basically the goal when people criticize "gentrification".
If this was true, everyone would buy REITs until it wasn't
Why not
This actually makes sense in terms of supply and demand but more interestingly it's because people tend to "upgrade" when they move this then frees up space at the lower end of the market.
Same idea as buying a car - most people won't buy brand new because of the cost.
That this doesn't happen, could be because there is a lack of capital, but to me the actual problem seems to be over-regulation and especially an over protection of tenants. If, as the article states, foreigners buy multiple apartments, and then let them sit empty, it's because they are afraid of renting them out. Especially with elderly tenants, you can't increase the rent, and you can't terminate the contract. Once you start looking around for a house to buy, you'll almost certainly bump into some homes costing only a tenth of similar houses in the neighborhood, and any Portuguese knows what that means: there is an elderly tenant, paying only 20 euros of rent per month, and your only hope of ever getting them to leave, is wait till they pass away (and even then, their children might try to continue the lease at the same conditions).
>even here in Cascais you see lots of unbuilt land
We have no intention of becoming a concrete jungle.
>Their job protection mentality needs to change towards a more dynamic job creation mentality
No thank you, please just keep your opinions to yourself, and honestly find somewhere else to go.
>low crime
Wrong, there's more and more crime, specially in Lisbon, Cascais, Sintra, and it's increasing in Porto and Braga too.
Specially on neighboorhoods with lots of "youngsters".
I don't think talent is moving in - at least in tech, there are lots of foreign companies opening offices and hiring local talent.
And for number two, it seems you're part of the problem the article mentions. You comain about how long it takes to work in a property you're INVESTINF in - but Portuguese people are struggling to afford property to LIVE in. That's the crisis, rich people investing in property makes it more expensive for poor people to own it.
I lived in Lisbon for a while. After expenses and a bedroom rent, my whole salary was spent, for a bedroom in a apartment shared with 3 other people. Many of my work colleagues lived in the peripheries and took more than 45 minutes to get to work, or more than 1.5 hours of daily commute. That's what the majority of Lisboets are being forced to, such that tourists and investors can have their happy lives.
This type of investment is causing lots of problems, and society should prioritize housing as a place to live in, not as a business to invest in. There are lots of other ventures for investors that don't ruin people's lives.
I’m a globe trotting engineer who understands globalism and what access tech is opening up to it. I don’t mean being a digital nomad. Rather, tech is collapsing or expanding concepts of borders, nationalism and so on in very meaningful ways. That’s a hugely compelling area to work in vs chasing an OKR for Google ads. I don’t think it’s reversible, and I find a lot of value personally and professionally from being in that space because this is the rare moment where the world is changing and I’m in a field directly involved with it.
The other aspect is it’s locals selling to the foreigners, and a personally compelling reason to go there is urban areas of the USA have screwed themselves up with the cost of living. I want to participate in problems, not pay $5k/mo for a 2bdr in NYC or soon Austin or Nashville so I can go to bars with other techies. So if locals weren’t selling at hugely inflated prices, I’d be firmly in favor of that. So, look to the Portuguese neighbors selling apartments first.
But, no excuses - I see $500k 2 bdr in Lisbon and think that’s a chance to live in a world that is way too expensive and commercialized in NYC. A local in Lisbon is getting hosed by that and my mobility, no way around it.
In short - am I part of the problem, what responsibilities do I have vs the locals and govt policies about foreign purchases, do my motivations matter at all vs the outcomes.
I don’t know yet, Hard to say, although it’s good to face hard facts via articles like this. Networked-globalism won’t reverse, and I think it’s more likely the quiet parts of the world (rural America, cheap Europe) are just going to go through some transformations that can’t be stopped and the symptoms look like this article.