Portuguese Banking Leaders Signal Alarm Over 'Unsustainable' Housing Market Trajectory
A consensus has emerged among the leaders of Portugal's top banking institutions, who this week issued a series of stark warnings regarding the country's housing market, describing the current situation as 'unsustainable.' While presenting their financial results for the first half of 2025, the presidents of Santander, BPI, Caixa Geral de Depósitos, and BCP all pointed to a severe and persistent imbalance between supply and demand as the core driver of record-high property prices.
Pedro Castro e Almeida, the chief executive of Santander Portugal, stated that the housing situation has become 'much worse,' a sentiment echoed by his counterparts. The primary issue, they agreed, is a critical shortage of available homes. 'The problem lies in the lack of supply. We notice that there is an effort to build and rebuild housing, but it is completely insufficient for the needs,' said João Pedro Oliveira e Costa, president of BPI, in comments reported by Público.
This supply-side failure means that a significant drop in house prices is not anticipated in the near future. Paulo Macedo, president of the state-owned Caixa Geral de Depósitos, commented that 'until we have a restored supply, there is no [silver bullet] and house prices do not tend to fall.' He attributed the shortage to delays in public housing projects and a private sector focus on luxury developments that do little to alleviate pressure on the mainstream market.
The bankers also noted that recent government measures designed to support first-time homebuyers, including a public guarantee and an exemption on IMT tax, have had the unintended consequence of stimulating demand even further. 'The stimuli given to young people caused demand to increase,' Oliveira e Costa remarked. While Miguel Maya, president of BCP, acknowledged the 'frankly positive role' of the guarantee, he conceded it does not resolve the underlying structural problem.
Responding to the concerns, Miguel Pinto Luz, the Minister of Infrastructure and Housing, acknowledged the severity of the crisis and cautioned against expecting a rapid solution. 'Don't think that housing prices will change next month, or in 2 or 3 months,' he stated, while assuring that the government is taking steps to address the issue. He announced a target of delivering 20,000 homes in Lisbon by the end of the year.
Despite the high-level concerns, the banks have not signaled any intention to restrict mortgage lending. The rising value of properties requires larger loans, which continues to fuel a competitive credit market. So far, default rates on housing loans remain low, providing a degree of stability to the financial system. However, the increasing concentration of real estate assets on bank balance sheets is being watched as a potential systemic risk should market conditions change.
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