Government Announces Plan for 133,000 Affordable Homes in Portugal
The Portuguese government has announced what it calls the “largest investment ever” in housing, a strategic initiative aimed at delivering 133,000 new homes at affordable prices across the country. Prime Minister Luís Montenegro unveiled the ambitious plan, which will be supported by a €1.3 billion line of credit from the European Investment Bank (EIB) and a new system of state guarantees to facilitate construction by municipalities and private developers.
The policy objective is to dramatically increase the country's housing supply to address a chronic shortage that has affected both low-income and middle-class families for decades. Portugal's public housing stock currently represents only 2% of the total, a figure significantly lower than the European average of approximately 8%. This new plan represents a monumental increase from the 26,000 homes targeted under the original Recovery and Resilience Plan (RRP) formulated by the previous administration.
The implementation strategy relies on a combination of public and private funding and development. The initial investment framework, which combined RRP funds with State Budget allocations, will now be significantly expanded. A central element of the new policy is the creation of a public guarantee provided through the Banco Português de Fomento, Portugal's state development bank. This mechanism is designed to mitigate financial risks for developers and municipalities, thereby encouraging the large-scale construction of affordable housing for both rental and purchase.
The government has confirmed that the financing opportunities, including the substantial EIB credit line, will be accessible to private sector entities. This opens the door for public-private partnerships and is expected to attract significant interest from national and international developers. Prime Minister Montenegro stated that the government intends for the Banco Português de Fomento to be “the partner for financing all operations that will make more houses available for rent and more houses for purchase, at affordable prices.”
This new housing policy was developed in response to the slow progress of the initial RRP housing component. Many municipal leaders had previously warned that they were unable to execute projects due to bureaucratic delays in project approval from the national housing authority, IHRU, and a wave of deserted public tenders as construction companies faced capacity constraints. As of August, only 11,361 families had received homes financed through the RRP, less than half of the original goal.
Under the revised plan, the government aims to accelerate delivery, leveraging the new financing and guarantee structures. While some of the housing will still be delivered under the RRP framework, the broader program will not be constrained by the RRP's strict execution deadlines, allowing for a more flexible and realistic timeline for this massive undertaking. The government's new target aims to fundamentally reshape Portugal's housing landscape over the next several years.
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