Report Highlights Decades of Government Underinvestment in Portuguese Public Housing
A new policy analysis from the ISCTE - Instituto Universitário de Lisboa has identified “chronic underinvestment” in public housing as a primary driver of Portugal’s ongoing housing crisis. The report, titled “The State of the Nation and Public Policies 2025,” was released this Thursday, revealing that Portugal’s public housing stock accounts for only about 2% of all residences, one of the lowest figures in Europe.
The primary policy objective of the report is to scrutinize the long-term failure of successive governments to create and maintain a robust public housing sector. The targeted outcome is to pressure the current administration, which is preparing to announce new housing measures, to adopt a more structural and transformative approach. The analysis argues that decades of neglect have led to an aged and degraded housing park, contributing to energy poverty and undignified living conditions for a growing portion of the population.
The implementation strategy, or lack thereof, from past governments is a central focus. The report notes that despite a national surplus of approximately 1.8 million dwellings compared to the number of households, this has not improved housing access. The author, Joana Pestana Lages, attributes this to a flawed implementation where policies have failed to mobilize vacant or underused properties due to unequal distribution, abandonment, and the prioritization of tourism and financialization over residential needs.
The affected population groups are widespread, but the report highlights a particularly severe impact on young adults. It finds that 76% of Portuguese citizens between the ages of 20 and 29 still live with their parents, a statistic that positions Portugal as the most difficult country for housing access in the OECD. The analysis also points to the resurgence of shantytowns on the outskirts of Lisbon, indicating that the crisis is disproportionately affecting low-income families in major urban areas.
The report does not detail specific budget allocations but implicitly criticizes the minimal funding directed towards public housing over many years. The funding mechanisms that do exist have clearly been insufficient to either expand the 2% public housing stock or to adequately maintain it. This has created a vacuum filled by the private market, leading to the “financialization and gentrification” of city centers.
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Stakeholder consultation and political support for a comprehensive public housing strategy have historically been weak, according to the report. It points to “conflicting interests” between promoting the right to housing and encouraging real estate as a financial asset, which has hindered the development of effective solutions. The political debate has often favored market-led approaches, which the report argues have failed to resolve the core problem.
The expected economic and social impact of this policy failure is severe. Socially, it leads to residential exclusion and inequality. Economically, it creates a volatile and speculative market that is inaccessible to a large part of the local population, potentially leading to long-term instability. The report frames the situation as a “perverse problem” that requires more than just cyclical adjustments.
A monitoring and evaluation framework for housing policy is implicitly called for. The report uses data from the 2021 census and OECD comparisons to measure the extent of the failure, suggesting that future policies must be held to account against clear metrics, such as the public housing stock percentage and youth emancipation rates.
In international comparisons, Portugal lags significantly behind European peers, many of whom have public housing stocks that represent 10%, 20%, or even more of the total market. This contrast underscores the uniqueness of Portugal's decades-long policy direction. There is no significant political opposition to the idea of more housing, but there is strong debate on the methods, with some advocating for market incentives and others, like the report's author, demanding a state-led, transformative approach.
The future policy developments and legislative agenda of the current government will be critical. The report serves as a direct challenge to policymakers, urging them to move beyond short-term fixes and commit to a long-term strategy of building and managing a substantial public housing portfolio. Understand policy impacts on your Portugal property plans at realestate-lisbon.com.