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Tourism pushes house prices yet higher

apartmentsHousing in Portugal has been under “great pressure” in recent years.

This is one of the problems identified in Portugal’s economy by the Organisation for Economic Co-operation and Development.

The OECD says that real estate prices, leveraged by tourism, have been affected but a lack of houses for sale to meet increasing demand.

The tourism boom and foreign investment policies, such as the Golden Visa and non-habitually resident programmes, have increased prices, especially in Lisbon, Porto and the Algarve.

The OECD blames the construction crash during the financial crisis as between 2007 and 2014, the annual investment in new houses fell by over 50%.

In its Economic Survey of Portugal 2019, the OECD says the crises was followed by a sharp increase in tourists which has pushed up house prices – but this may now be under threat, according to the OECD.

“In recent years, there has been a steady increase in the supply of tourist accommodation. The number of beds increased by 23% between 2013 and 2017 – a third of this growth has to do with the greater availability of rooms in local dwellings,” the OECD says, adding that “in Lisbon, Airbnb numbers more than doubled between 2015 and 2017,” and the total tourist demand clearly continues to exceed supply.

This scenario is causing, “strong growth in tourist accommodation prices” and contributing to “upward pressure on rents” and other costs.

The OECD says the trend may even threaten the “competitiveness of the tourism sector in Portugal” and trigger, “political interventions that limit its expansion.”