Youth Housing Tax Exemption Drives Demand and Reduces Supply in Portugal After One Year
The Portuguese government's policy to exempt young homebuyers from property transfer tax (IMT) and stamp duty has significantly impacted the housing market one year after its implementation. The initiative, which came into effect on August 1, 2024, was announced by the current administration as a key measure to support youth housing access. The policy's objective is to reduce the initial financial burden for individuals up to 35 years old purchasing their first primary residence.
The implementation strategy involved setting a price cap for full exemption at €324,058 for properties in mainland Portugal, with partial exemptions for homes up to €648,022. Since its launch, government figures indicate that approximately 43,000 young buyers had utilized the benefit by the end of May 2025, demonstrating strong uptake of the program. The policy targets the demographic of young professionals and families, often referred to by officials as the "qualified middle class," who have struggled with the high upfront costs of property acquisition.
An analysis of market data by the real estate portal Idealista reveals the economic and social impact of the policy. Demand for properties within the full exemption price bracket has surged across the country. In Lisbon, demand increased by 96%, while in Porto it grew by 55%. The cities of Coimbra and Leiria saw demand double over the 12-month period. This heightened interest has created a more competitive purchasing environment for eligible buyers.
However, the policy has also led to a significant reduction in the available supply of homes in this price range. The housing stock for properties under €324,058 has decreased in most major cities. Lisbon recorded the most substantial decline, with a 50% drop in listings. Setúbal and Coimbra both experienced a 41% reduction in available properties. This supply-side pressure is a direct consequence of the increased purchasing power of young buyers.
Stakeholder consultation prior to the policy's launch included input from real estate industry bodies, who warned of potential market distortions if supply did not keep pace with demand. The current market dynamics appear to validate these concerns. There has been some political debate regarding the policy's long-term effects, with opposition parties calling for additional measures to stimulate new housing construction.
The government's monitoring and evaluation framework for the policy is tracking its impact on both buyers and the broader market. A spokesperson for the Ministry of Housing stated, "We are pleased with the strong adherence to the IMT Jovem measure, which is helping thousands of young people achieve homeownership. We are also closely monitoring the market's evolution and are committed to developing policies that ensure a balanced and sustainable housing sector."
The policy is being compared with similar initiatives in other European countries, where tax incentives have also been used to stimulate housing markets. The key challenge remains aligning demand-side stimulus with supply-side solutions to prevent overheating in specific market segments.
Future policy developments may include a review of the price thresholds or the introduction of new programs aimed at increasing the availability of affordable housing. The current legislative agenda includes ongoing discussions about urban planning reform and streamlining the licensing process for new construction projects.
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