Portugal’s Youth Housing Guarantee Highlighted in OECD Tax Policy Report
The Portuguese government’s recent implementation of a public guarantee to support young homebuyers has been recognized by the Organisation for Economic Co-operation and Development (OECD) as a key measure among member states aimed at reducing property transaction taxes. According to a comprehensive report on property tax policies released by the Paris-based organization this Thursday, Portugal is one of eight countries that took decisive action in 2024 to ease the tax burden associated with real estate acquisitions. The report indicates a significant international trend towards tax reduction in the property sector this year, a departure from 2023 when tax reforms were more evenly split between increases and cuts.
The primary objective of these policies, as outlined by the OECD, is to alleviate the financial pressure on households, facilitate easier access to the property market, and stimulate investment. Portugal’s policy specifically targets this goal by offering a state-backed guarantee for individuals up to 35 years of age purchasing their first primary residence. This initiative is designed to address the significant challenge of high deposit requirements demanded by financial institutions, thereby making mortgage financing more accessible to a younger demographic. The government’s stated goal is to foster greater housing security and stability for its younger citizens amid a competitive market.
The policy was formulated in response to sustained housing price appreciation and its effects on affordability, particularly in metropolitan areas such as Lisbon and Porto. By underwriting a portion of the risk, the government aims to encourage banks to lend more readily to first-time buyers who have stable incomes but may lack the substantial savings typically required for a down payment. The Ministry of Housing has projected that this measure will enable several thousand young people to enter the property market sooner than they otherwise could have. The program will be administered through Portugal’s state-owned bank, Caixa Geral de Depósitos, in collaboration with other participating private financial institutions.
The OECD report provides an international context for Portugal’s actions, comparing it with other national strategies. For instance, Luxembourg temporarily raised its tax credit for property purchases, while Canada’s province of British Columbia expanded its exemption for first-time buyers. In contrast, some countries like Ireland have increased taxes on bulk property purchases to curb institutional investment in the residential sector. This comparative analysis underscores the diverse approaches governments are taking to address their unique housing market challenges. Economists and real estate analysts in Portugal are now closely monitoring the initial impact of the public guarantee, with early data expected to be released by the National Statistics Institute (INE) in the coming quarters. The long-term success of the policy will be measured by its ability to increase the rate of homeownership among young adults without contributing to further price inflation. Understand policy impacts on your Portugal property plans at realestate-lisbon.com.
