New Bank of Portugal Governor to Closely Monitor Real Estate Prices, Calls for Increased Housing Supply
Álvaro Santos Pereira, in his first address as the new Governor of the Bank of Portugal, announced that the central bank will closely monitor the evolution of real estate prices and its impact on financial stability. He identified the sharp rise in property values as a 'matter of concern' and advocated for structural reforms to address supply-side constraints in the housing market.
The policy objectives were outlined during his inauguration ceremony, where he stressed the importance of an independent central bank in maintaining economic stability. Santos Pereira's agenda includes a specific focus on the housing sector, where he noted a 'fundamental imbalance between the demand and supply of houses.' He stated, 'we will monitor very closely the evolution of real estate prices and their impact on the lives of families and on financial stability.'
As part of his implementation strategy, the new Governor called for a multi-faceted approach to boost housing availability. 'It is essential that municipalities unlock excessive restrictions on construction, it is fundamental to accelerate and agilize licensing, increase the densification of cities, and combat the lack of specialized labor in the construction sector,' he said. This indicates a push for policy changes at both the national and local government levels.
The affected population, particularly families and young people facing high housing costs, were central to his remarks. 'The enormous subida dos preços no sector imobiliário is a factor of preocupação, principalmente quando tomamos em linha de conta indicadores internacionais, os valores médios dos rendimentos das famílias e a sua taxa de esforço na compra de habitação própria,' Santos Pereira highlighted, referencing the strain on household incomes.
To enhance coordination on systemic risks, Santos Pereira announced he would propose the reactivation of the Conselho Nacional para Estabilidade Financeira (National Council for Financial Stability). This body will serve as a forum for the government, the central bank, and other financial supervisors to regularly discuss threats to stability, with the real estate market expected to be a key topic. He also confirmed the continuation of a 'macroprudential policy towards emerging risks to financial stability.'
The budget and funding for these initiatives were not detailed, but the Governor's reformist stance suggests a proactive engagement with the government on economic policy. He emphasized that while Portugal's economy is in a better position than a decade ago, further structural reforms are necessary to boost growth and reduce the country's high levels of public and private debt.
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The expected economic and social impact of these policies would be to moderate the rapid price growth in real estate and improve housing affordability, thereby contributing to overall financial and social stability. The Governor's statements were met with interest from market analysts, who see the explicit focus on housing supply as a significant policy signal.
A monitoring framework will be a core part of the bank's strategy, with Santos Pereira noting the importance of data from international indicators and family income levels to guide policy. This data-driven approach will be crucial for the bank's supervisory role over the banking sector and its exposure to the property market.
There was no mention of political opposition, as the speech focused on the central bank's institutional agenda. However, the call for deregulation at the municipal level is a topic of ongoing political debate in Portugal.
Future policy developments will likely emerge from the newly reactivated National Council for Financial Stability and the bank's ongoing analysis. The Governor also announced plans to propose a revision of the Bank of Portugal's organic law to modernize its functions.
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