The Portuguese can no longer afford to live in Portugal
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Quite honestly, apart from the generally increasing gap between rich and the poor, one big problem in societies nowadays is that you can simply get richer and richer just from owning property. For example, if you own three ordinary apartments in Lisbon, you can live in one of them and easily make a good living by renting out the other two as holiday apartments. Because cleaning services, guys who do repairs, etc., are cheap in Portugal, this involves almost no work. Moreover, the net worth of your property will continually increase while you do (almost) nothing. I'm not saying I blame these people, I would do the same if I had the opportunity, but this is a huge structural problem in my opinion.
If you are becoming a tourist hub, then create an off-town tourist area and add a convenient transit line/people mover to the central parts of town. Tourists get reasonable housing, locals don't get displaced and the influx of population does not destroy the cultural vibe of your town.
Prohibition never works, and piracy is a reflection of an unmet need. Banning things merely airs out open wounds, and leads to grey-markets such as shady uber/airbnb equivalents within the city. If you want to reduce abortions, banning merely leads to riskier abortions. Examples of this are dime a dozen.
When demand arrives, the cities MUST adjust to incoming demand. Couple examples of working uncomfortable compromises are: 1. Paris - Choose a small district and allow it to go full skyscraper. The rest of the town maintains its architectural identity. 2. Barcelona - Go full superblock. Means that tourist activity gets neatly distributed across the city (removing bottlenecks) and tourists do not lead to increase in car traffic.
I could go on and on, but 1 fundamental truth stays. Bottlenecks only help those who control access to it. The key is to eliminate the bottleneck (more housing). Band-aids (rent-control) or equitable distribution of bottleneck gains (no-renters->only-homeowners/ more single-family-housing) never works. It only leads to the situation festering (see Bay Area / SF), and makes for an even harder problem in the future.
I'm not sure if my comment conveys any cohesive point, but I hope folks get something out of it.
p.s: fuck NIMBYs
The exact same concepts: cheap grandfathered lease, hoping the landlord doesn’t cancel, can’t afford rent despite making >100k, “luxury apartments”, empty apartments, illegal renting (e.g. AirBnB) and shadiness.
Portugal should build more housing, which is a simple, effective solution if the rent is too damn high: https://www.theatlantic.com/business/archive/2012/03/the-ren....
The nice thing about indoor space is that we can make pretty much as much of it as we'd like.
If you want to decrease unemployment, you add tariffs for imports enabling more businesses to open domestically (i.e. tariffs effectively increase import costs).
Similarly, you can loosen building codes to increase production of homes, limit visa duration, require citizenship for home ownership, etc. Those are some obvious fixes, why is the government not doing it?
Beyond the obvious potential fixes, all EU countries are facing the same issue:
- supporting immigrants (high level of immigration)
- no controls over ones border(s) (anyone can move between EU countries)
- over regulation and too many social programs (reducing peoples willingness to work & increasing burden on the current tax base)
- over regulation of industry and farming has left the only option to survive being to work in a city (as an example, see nitrogen reduction regulations in the Netherlands)
It's all "give-and-take" you have to decide how you want to live... To me it sounds like the EU is hitting a critical state, but is there a will to make the tough calls yet?
That this doesn't happen, could be because there is a lack of capital, but to me the actual problem seems to be over-regulation and especially an over protection of tenants. If, as the article states, foreigners buy multiple apartments, and then let them sit empty, it's because they are afraid of renting them out. Especially with elderly tenants, you can't increase the rent, and you can't terminate the contract. Once you start looking around for a house to buy, you'll almost certainly bump into some homes costing only a tenth of similar houses in the neighborhood, and any Portuguese knows what that means: there is an elderly tenant, paying only 20 euros of rent per month, and your only hope of ever getting them to leave, is wait till they pass away (and even then, their children might try to continue the lease at the same conditions).
> I live in Lisbon as a foreigner for more than 12 years now. We pay a rent for a small flat that used to be very expensive … Rents in the city have skyrocketed, we'd have a hard time finding anything
I know this comment won’t be received well, but aren’t you describing gentrification & how you participated (maybe unknowingly) in what has caused prices to skyrocket. And you’re now complaining because someone even more rich than you has caused prices to exceed your means, just like you did to a local person when you moved in as a foreigner.
What’s propping all of these property prices up? Supply and demand rules don’t seem to apply at all. You might have thousands of empty apartments in a city yet the price only keeps going up.
Everything is broken, but housing is particularly broken.
https://www.architectmagazine.com/practice/how-to-fight-weal...
I firmly believe that most investors are chasing capital gains as yields at current prices (even with extortionate rents) are mostly a joke. It's bad enough that some speculators don't even bother renting out their property.
A widespread residential property market crash would be painful but looks like the most likely outcome and solution. I'm hopeful that as interest rates rise capital gains will diminish, disappear, or even go backwards. Indications are that this is already underway in many places.
You'd feel at home in LA.
I've seen this trend here for at least a decade now. I know some people who say that the construction of these luxury apartments is a sign that the economy is recovering, but I remain skeptical. These places are the least lived-in looking apartment complexes I've ever seen in my life. There's one down the street from where I live that was completed around 5 years ago, and I would bet good money that most of it is vacant. I rarely see people going to and from it, besides the occasional few who visit the burger bar right in front of it. Too many of the balconies look sterile.
I don't know why so many of these are being built outside of LA proper, but I have a theory for why there are these massive complexes being built; the rich have spoiled children they no longer want to deal with so mommy and daddy pay for these apartments to house them. I used to deliver food to these places and, without fail, I was delivering to men and women who appeared way too young to afford such places.
This actually makes sense in terms of supply and demand but more interestingly it's because people tend to "upgrade" when they move this then frees up space at the lower end of the market.
If this was true, everyone would buy REITs until it wasn't
A planet full of empty "luxury apartments" and most of us homeless?
I'm a bit conflicted on this. I definitely see what you're saying (and often repeat it myself).
But it should be noted: property is simply an asset like any other. If there's easy and outsized returns to be had, the demand for this asset would increase, pushing up the price to the point that the returns on the asset are in line with returns of other assets which have similar risk/effort profiles.
To say that one can make money 'doing nothing' owning any asset (that has a positive return) is true. But that's not per se some kind of economic or political problem, it's a normal feature.
Of course to absolutely do nothing and still earn enough to live off of, means you must have earned enough money to purchase a large amount of assets. Supposing rental income of 5%, and supposing rent is 25% of someone's wages, and supposing a 20% tax rate on your returns, you'd essentially need to purchase assets worth 100 times what someone spends on rent.
(ex: if you need 40k to live on, spend 25% or 10k on rent, you'd need 100x that or 1 million returning a 5% return that's taxed 20%, leaving 40k in net income.)
Amassing 100x your rent is no easy feat, and in fact it means that someway, somehow, you've provided 100x your rent in value, without spending a penny of it, and saved it all, then poured it into an asset (incurring risk and requiring some level of commercial effort), and then, yes, you could start to approach doing 'nothing'.
For many that's a life's worth of work. Buying such assets is really no different from putting in an equivalent amount of money into a retirement fund, and that fund in turn buying assets like companies. Whether it's companies that buy and rent out cars, or real estate, or produce and sell, the people owning these enterprises through their retirement fund are 'doing nothing' while others are working.
But the important part to note is that anyone has access to this system. Every person can, proportionate to their income (based on their economic value to society) buy assets.
In fact, I'm able with a click of the button not to just buy a part of a in Portugal, but rather the biggest and most successful company on the planet: Apple. I can buy a small part in it, and profit when many of the planet's smartest and most educated people build & sell some of the most cutting edge consumer technology day in day out. Whilst doing: nothing.
So I don't really see a structural problem with this system. What is problematic is the stuff around it. For example, in some countries real estate goes untaxed and is subsidised, and is bailed out when things go bad. Subsidised private profits, and socialised public losses. It's unfair and a failure of markets and governance. Another example is that swathes of people indeed inherit value to the point they've never done any contribution to the world to get into a position to 'do nothing', rather than work to retire off of the fruits of their labour, they could in effect retire from work before ever even starting. This is where the system breaks down and must be balanced, again by e.g. taxing inheritance and balancing things out.
Finally, markets work when price & profit signals can balance supply & demand. If there is a shortage of bread, demand outpaces supply, the price rises, and overnight new bakeries will pop up bringing down the price. In real estate high prices often do not trigger new supply in many countries, either due to geographical limitations (e.g. the mountains of Taiwan limiting buildable space, or simply the fact physically there is a limited area we consider to be 'downtown new york' for example), but more often due to political limitations (NIMBYism). Because in real estate markets in many areas do not naturally solve the problem, government intervention is needed to ensure more equitable and fair outcomes moreso than in other types of markets. Again here I see a role for stronger taxation on outsized profits and some income support for groups otherwised pushed out of neighbourhoods.
Why not
I was lucky and making really good money in tech but was devastated by how the area I grew up in had turned into a nightmare and everyone I know (even family) leaving the area. I too ended leaving as the cost vs. quality of life didn't make any sense and I couldn't see my family living in a place I didn't even recognize anymore. Most people don't talk about it but there is a huge diaspora of bay area residents due to the stuff mentioned above and it breaks my heart to think we will most likely never return and familiy/friends I expected to spend the rest of my life with all leaving.
There is more to left politics or even sane politics than being socially very liberal.
SOURCE
Welcome to Portugal, the new expat haven. Californians, please go home
https://www.latimes.com/world-nation/story/2022-05-12/califo...
Austin? Ok, sure. How many Californians are expatriating to Lisbon? Is it that many? Ok, let's do Londoners next.
A lot more right?
Principal factors, you say. Let's see it.
How do the criminals afford to live in the area?
The petty crimes are committed by a small but very vocal minority of homeless people who are severely mentally ill and/or severely addicted to meth/opiates. They can afford to live here because everyone has apparently decided the most humane thing to do is to look the other way while they struggle, freeze, and eventually overdose and die on the street.
The larger-scale thefts are committed by organized crime operations that essentially operate a business of stealing and reselling stuff because of notoriously lax law enforcement. Think the opening scene of Requiem for a Dream, except an entire crew doing that, over and over and over. They make a lot of money doing this -- and drive up the cost of basic essentials for other working class people who have to buy what they resell because they clear drugstores out. They make enough to live comfortably, despite the high cost of living, apparently.
My housemate's car was stolen about 15 years ago(!) and used for a bank robbery somewhere else on the peninsula (also close to a freeway) and abandoned in Oakland.
There's a regular sweep of my neighborhood on the peninsula for unlocked cars at night, they will take anything, and break into cars for visible bags. It's practically every third topic on Nextdoor.
Zoning is the most obvious regulation that makes things hard: most land is zoned exclusively for single family homes on large lots. There's been a bit of movement on this from the state level to allow ADU's or duplexes, but not enough, there's usually various legal hurdles that make it harder. Missing middle housing is mostly still illegal.
The other thing is all the various processes involved. CEQA makes things take a long time (not that I'm opposed to protecting the environment, but surely there's a way to do it that doesn't take years for an apartment complex). Community meetings and planning commissions can often block new developments for random, arbitrary reasons, like "tall building would cast too many shadows" or "demand on street parking would increase"; these are things that are so obviously inherent to any significant development permitted in areas where you can build taller apartment buildings, and yet they're still used to block more housing.
By hard left do you mean "wokeism" or "communism", because the former is absolutely not hard left
1. Flood the market with affordable state housing, Austria-style - with the bonus of building new, boosting the national economy.
2. Create very progressive (rapidly rising) taxes based on property value - making untenable the current practice of parking money and profit by simply buying & holding empty flats and the like.
3. Raise salaries - currently portuguese salaries, and their weight on GDP, rank the lowest in the EU.
(and no, it won't create an inflation spiral: the current inflation spike is, first and foremost, the result of a supply shock, price-gouging and speculative/cartel practices - corporate profits being at a record high is proof of that)
Unfortunately, incentives are heavily stacked on leaving things as they are, as the ruling class is mostly made up of the landlord class, and, is not sensitive to (sometimes even not aware of) the struggles of assetless commoners that only earn income from their (low) salaried labor. Or, even worse, stands to lose their current large gains on capital/assets if this is fixed - and most portuguese media outlets trumpet their - private - master's voice and interests. Additionally, just leaving things as they are, also scores brownie points with the EU by making the Government (even if "center-left") appear "frugal". And PM Costa has personal ambitions for future EU high office.
(...who will be the next head of the European Commission or the European Council?)
The proof is the observation that endemic inflation only happens in countries with fiat money systems.
So you're just going to ignore a war involving two of the biggest exporters of some of the main raw materials we have (foodstuffs and energy) on the planet and associated supply problems on crucial things? Not to mention a pandemic that wrecked havoc on supply lines. None of that matters, your theory goes, it's purely a monetary phenomenon, because only countries with fiat money systems are impacted. Could you share some countries with alternative money systems that aren't impacted?
Inflation is the measure of the price of goods
> It's the result of funding the deficit by running the printing press
Increasing the money supply indirectly increases the price of goods. It matters in the long run, but the price of goods can change in the short-term based on supply. The oil crisis of the 1970s caused oil prices to increase because oil supply was limited. This would have caused inflation even without an increased money supply.
> creating debt backed by nothing. ... fiat money systems.
This is more of a tangent, but the money supply can also shrink in fiat systems. Fiat currency can be shrunk via taxes. Debts can be defaulted. Fiat systems aren't inherently inflationary; but they target a low level of inflation because they prefer it to deflation.
More generally anything that increases the money supply. Non-fiat monetary systems have suffered from inflation due to debasement of the currency or an influx of precious metals use to create coins (e.g. when gold from the new world flooded the Spanish economy).
Also, Quantitative Easing was literally printing money and yet EU rates (inflation & sovereign debt interest) remained low, many times negative - with some EU countries observing actual deflation.
Only when the supply shock did happen (Covid & Ukraine), rates started to increase. And only after that, price gouging practices started by riding the supply shock public perception - resulting in said record corporate profits.
If there was inflation caused by excess money, how could corporate profits be at record highs?
gas prices? electronics supply issues? general supply chain issues? (expected soon) energy/food supply issues?
how does commodity money fix that?
A 'straight forward fix' is to ban foreign ownership of homes and AirBnB. Poof. Now, I wouldn't support that, but it would be 'straight forward'.
#2 is reasonable.
#3 is a big glib tough. "Hey, everyone should just get a raise!", if it were only that easy!
This has pretty much already been done in Vancouver, which has layers of Foreign Buyer Taxes, Speculation Taxes, Empty Home Taxes and strict Airbnb regulation.
It absolutely did not make the problem go 'poof.'
All these things were well worth doing and helped in various ways, but it remains that the core underlying problem is that there's not enough homes for everyone and scarcity ensures high rents and high prices. The dull solution is that a hell of a lot of homes need to be built.
What's wrong with large industrial projects?
It's exactly what we need at this moment - in fact, both Portugal and EU-scale.
This would cost a small fraction of the Quantitative Easing program from the European Central Bank.
(and these Massive Real Estate buildouts must include the lessons in Urbanism learned from past such projects)
2. (y)
3. State sector raises salaries, private sector is forced to follow. Just raising minimum wage is positive, but not enough. This tends to compress people to the bottom salary tier and promote even more brain drain.
When people suggest that adding more new housing, either public or private, doesn't work, this is usually left out: how much housing actually was being added?
Looking at Switzerland, which printed a lot of money in the past years but still has low inflation and had mostly deflation over the same period, there isn't a simple connection between money supply and inflation.
Inflation isn't merely a monetary issue.
It won't be affordable at first, of course, but as you flood the market with new high-rise apartments, the price will inevitably plummet.
Fun fact: I - as a single - live in a way too big, luxurious and expensive apartment because of this. I rented it, when I was still working for the man and was making a killing. Now I live a much more modest 4-hour-workweek life. It would be better for me to move to an apartment half the size. Then a big family could live here nicely. But no way. No landlord in Germany rents to a freelancer who enjoys a "I'm mainly slacking off for a while" lifestyle.
The issue is somewhat the same in Paris. It’s very hard to afford living there because non local use properties as an investment and prefer them staying empty than risking them degraded and people who want to rent make more money on Airbnb.
It’s fine if you want the city to become Disneyland but very depressing otherwise.
I would think only a small one-digit percentage?
taxing empty - yes
limiting short duration - no, just tax it more. Limits are too easy to hack.
It's easy to implement, the market exists to price that amount, and provides a direct incentive to either put the property to productive use or get rid of it.
Building physical houses to sit empty as a financial instrument has to be one of the peaks of capitalist insanity.
Two wrongs don't make a right.
That's one of the reasons why portuguese renting market is so bad. There were rent control policies for like 40 years. It has been phased out but the market still has the signs of its damages.
There also other contributing policies and the policies change almost every two years.
I'm one that could invest in the market, to bring more houses to be rent, but I can not risk 150 000 euros buying a house to rent (middle income market) and then having problems evicting with a non-paying renter, being forbidden to increase the rent due a new law or god help me if I need to use the court system to ask for renter damages.
Lack of building when the population is still growing.
Encouraging single lifestyle, both by kicking out kids early and shacking up later.
Cases where sitting on an empty property is risk free.
Infrastructure increases taking valuable space.
Giving early birds great deals compared to today, making them sit on huge housing for a pittance and making moving out a terrible deal.
And politically, there simply is no immediate incentive to solve things when the current population of homeowners does not contain enough people to vote in favor of those that don't own homes.
Some have been unable to raise rents since the 1910s!
If you have a city with X housing units, but 5X people from within the city + all over the country/world want to live there, and for whatever reason no one wants to/can build 4X more housing units, how do you fairly determine who gets to live there and who doesn't?
* Is it fair if you were born in Lisbon you get to keep living in Lisbon?
* Is it fair if people early in their career get to live in Lisbon because it will advance their career much more than if they lived in the countryside?
* Is it fair if a rich person gets to live there because they can pay a lot of money to do so?
Whatever policy is in place, it will be deciding the winners and the losers, or the people who get to live in Lisbon and those who don't.
The author of the article says:
> Digital nomads, retired foreigners, and millionaires searching for Gold visas are pushing the Portuguese to another place.
> Is this really that fair?
We are obviously supposed to say "no", but I think the answer is yes. I really hate this form of argument by rhetorical question that only works if you _already_ agree with the author, if my answers are different the whole article just doesn't work.
The phenomena that honestly pisses me off, is that all of these countries touting their immigration policies are lying to immigrants. They're selling them on a quality of life that existed 20 years ago and is no longer possible even to the people who have lived there all their lives.
It's absolutely fraudulent and exploitative behaviour by this countries.
For an immigrant from eastern europe, yes, Lisbon is not the great place it was 20 years ago.
But for an immigrant from US/Canada, Germany, UK, or whatever rich country. Yes, it's a great place to go to. A high rent in Lisbon is nothing to them, and the rest (utilities, restaurants, commerce) is still pretty cheap.
Good weather, good food, cheap lifestyle is quite attainable... just not for everyone.
Well, we live in a democracy here, and so we vote.
Our government announced their intention to ban residential investments in Porto, Lisboa, and the Algarve for the golden visa, and adjustments to the taxes for long-term v. short-term letting that went into effect this year.
It will take time to see if it is actually fair or not, but the cool thing about democracy is we can always vote again in the future!
Is it fair that someone, by sheer accident, was born in SF, is SWE and now wants to take advantage of that stupidly high income and dislodge people who have lived their whole lives in a certain place? Probably worked much harder and for longer? Where all their family and friends live and always lived for more than a century? Their culture and life? You seem to forget Portugal is not the US. They have more than 3 times your history and with it each place has a markedly different personality and much deeper roots not only culturally but also relationally.
Maybe you're used to a capitalistic emotionless everything-is-replaceable view and that in life all is fair and square, the ends justify the means, but perhaps you should rethink it.
Central city locations in Lisbon and Porto have exploded in price, but this is due to AirBnB rather than rich expats. Portugal's tourism industry has boomed, which has put money in a lot of people's pockets, but has distorted local economies somewhat. Better management is required, for example cracking down on AirBnB and NOT building that new cruise liner terminal.
Unfortunately the upper middle class idyll (alluded to in the article) of living a dilapidated (but in a cool way) apartment ten paces from your favourite coffee shop, while doing a socially respectable play job is now no more viable here than in SF, London or Berlin. Indeed, my own favourite 'coffee shop' got turned into a chain tequila bar.
Outside the hot centres, things aren't as bad. Public transport (at least in the AML - Lisbon Metropolitan Area) is excellent by any standard, and decent apartments are available for sensible prices well within one hour public transport commute of the downtown. Compare with London, where people are fighting over each rental.
> family factor weighs a lot here
Yes, and this is a problem, given that Portugal only became democratic 48 years ago and has a large amount of cultural baggage from quite frankly medieval times. Also, the implication of this statement is that family doesn't count elsewhere - and in case you missed it it was spelled out a few lines later, which should give you an idea of the residual naivety and insularity of (old) Portuguese culture. Agency - the idea that you can do or think something independently, and then take responsibility for it - is somewhat lacking too.
But! There is much that is very good about Portugal and the Portuguese people, I feel that here it is ok to be kind to each other. Furthermore, there are good changes, new opportunities are arising (perhaps in a very small part to some of the more productive visa holders), and I see a great future for Portugal - even if many Portuguese often don't.
Why do you say that the rise in housing prices has been due to AirBnB but not to rich immigrants? It seems a bit odd. Both can outbid the average native and just push prices high. Many rich immigrants also buy up loads of property for speculative/investment purposes, not just to live in.
>has a large amount of cultural baggage from quite frankly medieval times
I wonder what exactly you mean by this.
I distilled "lack of agency" as: not rewarding initiative, people afraid to take initiative. the portuguese boss does not like the employee to take initiative, and the employee will not do so. copying existing British designs is "safer" socially speaking, than making new designs.
source: I'm portuguese, I'm a weirdo and people always try to conform me to a box.
>I wonder what exactly you mean by this.
I was at a festival last night - the screens by the stage were playing ads in between the acts (that itself is a topic for another day!).
After a cringe-worthy advert for the UK (that I didn't even recognise it was so far fetched), there then appeared a public information message in Portuguese. It said (and I do my best to translate):
"What is the place for a women?" (pause) "Wherever she wants it to be"
Full credit to them for trying to drag themselves into the 21st century, having mostly avoided the 20th - you can see what I'm getting at.
Incompatible definitions of fairness. They have in practice a much higher metabolism requiring more pure ingredients, from better sources, it's medically harmful to cut them off like instantly. Although at the same time they contribute to both the problem and solution, like it depends. Turns out very rough to adapt to on short notice, flat-out can't in many cases, and for sure you can't send your kid to any random Cuban school with kids on the other side of a former class divide, from one day to the next? Like how are you going to tell that kid? Just gotta be "really cool", in the "they was cool", sense, and some kids make it and others can't, wretched childhood. Although at the same time Fidel Castro, biographically, grew up among blacks because his father didn't recognize him fully, not even a second son, so he knew it could be done and there was the will that it happen.
And people will price discriminate against that kid forever, never accept he's no longer rich unless he's filthy in rags...that's a rough sketch of it. Misery all of a sudden, and metabolically difficult, like it's not just 2000 calories here's some water with fluoride for your teeth boom done. It wouldn't take your body 24 hours a day if it took a single sentence to summarize like I just did. Water alone, Americans aren't supposed to drink Chilean water or they get diarrhea like automatically, it could be anything, selenium plus manganese in the water table, natural salts (as opposed to NaF) that are systematically removed in America. It's along the same lines as toothpastes in Chile having over 6x the sodium flouride of American toothpastes. Like literally you couldn't buy those same toothpastes in America without a dentist's prescription, I innocently told them 5000 ppm pharmacist looked at me said "No that you need a prescription" like it was opioid that kind of reaction. I was actually prescribed toothpaste weaker than the only strength toothpaste Walmart sells in Chile, it's all 1650, like eating the color white, kids hate it because it's good to hate it because it's bad for you. Counterproductive, makes people become busted and scream at their kids, everyone in the family going to the Walmart to buy cookies. Makes you crave. Gives you ADD, I actually--it turns out--don't have any symptoms of ADD--and I generally have literally every single one and nothing else--when I cut fluoride out of my life. Drank from a well. I actually paid attention, as a verb, for once in my life. Like a colorblind guy seeing blue for the first time. So weird, now I know what people are talking about.
So if you don't want F poisoning, which is exactly what the fuck that's all about for political reasons, there it is again, didn't want this country to turn into another Cuba, Socialist Sandwich as Nixon put it, you flourinate really hard. Breakfast lunch and dinner, inescapable, it's a super expensive subsidy but it's not for your teeth, it's for your brain, it is incapacitating so you don't eg sue or protest. If you know the way around here in Santiago, you'll figure out you have to pay triple at a homeopathic store, the pharmacies don't carry any toothpaste that doesn't F you 1650 ppm. Either you go way out of your way or go without toothpaste, which is a thing for instance in Cuba. Everyone has a hard time adapting to that.
So that's an example of adapting, and it can take decades. And it's expensive to adapt, hard-learned lessons like flunking courses at Stanford in my case because I was consenting to absurd doses of fluorine, not knowing the harm. Not one ADD doctor brought it up, like they have them on a gag order, it's the most obvious shit nobody had ADD in the 50's and then you F'ed up the water and now everyone has to see a shrink, 2 + 2 equals what?
So the wealth and political status decouple, and they benefited when times were good, and then...well they get a new citizenship somewhere else and adapt to that, not Cuba but maybe 60's Brazil, learn the language which is work, learn the laws under which they must now live, and relearn the balance of power what the traps are what the actual opportunities are...and be a survivor, there are people left behind that couldn't get out, not savvy enough, bad airport game missed the last flight, and yeah they have money but they get charged much more for everything. Like the parent poster. Price discrimination evens things out in the end. That's what you replied to.
Dude a raft is not what determines refugee status, it doesn't have to be a giant pornographic Hollywoodesque stereotype of all the tropes of taking refuge--which is what the word means--to qualify in my book. Being hated is enough.
Others have said it before, but mass tourism is the new Dutch disease [1]. Pure tourist cities like Venice are already too affected by it to have a chance of getting back to a normal economic and social life, but there are other cities that are still trying to fight it, like Barcelona. Not sure if there are any political forces in Lisbon or Porto ready to take the same stance.
I also see a bright future in Portugal. Many young people that moved out after university want to come back, after making a killing in their career. They might earn less with the move, but you don't need a six digit salary to live very comfortably here.
Who doesn't want to spend 15% of his woke day commuting.
Hard cringe.
The horror! ;-)
However, you can't have it both ways. If
> countless stories of flats left uninhabited by some rich person who arrived at the building, bought two flats so that he could get a visa, and doesn’t even live there
then clearly not
> wealthy foreigners from all over the world, to whom we offer a paradise where they enjoy the same services but where they don’t pay or pay less tax than the general population
Either they live there and use services or not.
However,
> countless stories of flats left uninhabited by some rich person who arrived at the building, bought two flats so that he could get a visa, and doesn’t even live there
So, the way it works is, as a golden visa applicant, you have to spend 7 days in the first year. The next 2 years, a combined 15 days (which can be spread whichever way you like). Subsequent renewals are different (21 days / 3 years). You can already live there when you apply, but you are not _required_ to.
You have to maintain your investment for at least 5 years (or until you become a permanent resident) and renew the golden visa twice. Then you can apply for permanent residency (or citizenship if you qualify), if you want to.
It's entirely conceivable that people would buy property and only vacation there. Which, if we are honest, is not a problem, given that large cities are excluded from the program. And cheaper housing does not qualify, either. So you would be taking property that's pretty expensive already (€500,000, €400,000 for low density areas) - OR requires the property to be older than 30 years old, and a minimum of €350,000 (or €280,000 in low density areas).
1) The investment doesn't need to be in a single property; you could buy up multiple smaller properties that sum to the amount you need, and rent them out or leave them empty.
2) There are also hotel investment options rather than buying up existing real estate, and those are still available in the big cities as they are considered 'commercial'
It doesn't matter if rents are curbed under 1k a month. The median under 25 earns less than 700 euros a month.
I talk to people in Portugal and I hear more or less the same salary discussions and ranges for more than 20 years. It is a stagnant labour market for literally +20 years! When adjusted to inflation it becomes even more ludicrous.
The iron curtain countries in the Baltic as well as Slovenia and Czechia, have all surpassed Portugal in wage growth. That should give anyone reason to pause.
Portugal has a few succesful SMEs, a wine industry, a cork industry, some textiles and not much more to show.
The Portuguese economy is mostly services which are circular not actualy exported and the obvious exported component which is Tourism.
The majority of Portugal's EU Cohesion Funds were sunk on motorways. The country has suffered from lack of strategy in both Government and Industry since the 80's.
There is only so much we can keep blaming on the dictatorship regime of Salazar 50 years ago. At some point politicians and business owners/investors need to take ownership of their fuck ups.
Tech businesses thankfully have been leading the way, aware that intrinsically remoteable work means they're competing with foreign capital for workers, but the situation is nowhere near where it needs to be (higher wages across ~more~ all trades and industries).
- Lisbon: 18.06
- Porto: 13.55
- Sydney: 9.09
- Melbourne: 7.05
- Vancouver: 12.62
- Toronto: 11.82
- San Francisco: 7.02
- Los Angeles: 7.47
- New York: 9.99Now, even in suburbs, housing is far more expensive than most wage earners could expect to afford.
Maybe we are thinking of two different sides of the same coin, but I would genuinely be interested in reading articles from the ~mid-century describing what you suggest.
Sometime in the last 100 years, leaders around the western world realized the massive real estate opportunity of strangling natural urban growth and price gouging on the limited supply they artificially created through euclidean zoning and countless layers of regulatory process meant to disincentivize investment in development. Just build more housing, and a lot of the economic ills of the 2020s around the world will evaporate.
More than anything, NIMBY neighbors keep killing less expensive forms of housing... 100's of homes, I would say, in the time since I started observing the situation.
STR's make for a convenient bogeyman that people can point their finger at. It's a bit more disturbing when you realize it's actually your neighbors; kind, ordinary people in most regards.
The government has said they're going to start tackling the issue of short term lets this month. I'll believe it when I see it.
He could rent them out, but the long term rent contracts would not net him the same amount in a year than what he gets in just the summer months. Plus, long term contracts have a lot of other expectations from him as a land lord, whilst Airbnb is pretty chill.
From his point of view, airbnb is amazing, from my point of view when I was searching for a flat, I wanted to stab him in the face. It is what it is.
But pre-covid Airbnb was about 10% of the total stays versus Hotels. And tourists in total were about 6% of the overnight population throughout the year on average, again the majority in hotels. And after corona this is a lot less due to new legislation (which caps it to max 30 days per year without a hotel license).
But yes, tourism obviously pushes up prices, but there's a big benefit to the local economy of course as well.
I almost think that the US is doing pretty well with this in the sense that you can still move somewhere that's cheap relative to your salary, but that only holds true if you're able to do it with remote work. So, maybe it's not true at all.
Portugal's demographics, like much of western Europe, didn't look like they were going to change dramatically: https://en.wikipedia.org/wiki/Demographics_of_Portugal - so getting set up to build a bunch probably wasn't a priority.
It looks like immigration picked up a lot, and also there has been an influx of wealthier immigrants.
It will be interesting to see how they handle it. Having people with money move to your country ought to be a positive thing, but you need to build housing for them so they're not competing with locals - and winning.
It's really impossible to make generalizations about the legalities go building in the US, as there is no federal control over such things. There are some state-level laws in some states, but for the most part zoning is left up to cities and counties, leading to literally thousands of disparate sets of laws and regulations.
My city has historically heavily restricted high density housing (until the state stepped in), while the city literally next door has added enough high density housing for ~20k people in the past decade.
But the US is large and there are places where housing really isn't the issue (but there can be other issues, too).
Generally, having all these big money foreigners trying to come to your country is a good thing. It sure beats having no industry and you can crank up the tax heat on them as high as you want since nonresident-noncitizens don't vote. The real problem is that the Portuguese government is not being made to share the bounty of a few winners with the rest of the population, who are instead left to just deal with the externalities.
There is another path that does not involve locking the doors and hanging up a "closed for business" sign.
I wish we had public data showing how much each person in parliament/city government gets each month as rental income... would probably be pretty enlightening.
(Probably similar for other EU countries with high relative purchasing power)
Absolutely no idea how it can be fixed as there is only so much space to build on in the large urban centers everyone wants to be in.
How is that different from other places? Houses in the center of big cities are always a lot more expensive than others far away from it. Want a small one in the center of Rome? Here you are: 27mq, 2nd floor and no elevator, no heating, no air conditioning, abysmal energy efficiency, no kitchen, renovation needed, only €600,000. What a bargain!
https://www-tecnocasa-it.translate.goog/vendita/appartamenti...
No thanks, I'll rather spend less than one third for the 7 times bigger house I'll be soon relocating to. I lived most of my life near the center of Rome; if you come as a tourist I concur it can be a wonderful experience, but after decades of traffic, noise and pollution, leaving for a much quieter and cleaner place with plenty of space for my hobbies is the best thing I could do. And it's also much cheaper. YMMV of course.
Yes, very central touristic areas are expensive but half a million can get you 3 room apartments you can go to center by feet, even less would be enough.
That's the price you would pay, e.g. in Ostiense.
I’m a globe trotting engineer who understands globalism and what access tech is opening up to it. I don’t mean being a digital nomad. Rather, tech is collapsing or expanding concepts of borders, nationalism and so on in very meaningful ways. That’s a hugely compelling area to work in vs chasing an OKR for Google ads. I don’t think it’s reversible, and I find a lot of value personally and professionally from being in that space because this is the rare moment where the world is changing and I’m in a field directly involved with it.
The other aspect is it’s locals selling to the foreigners, and a personally compelling reason to go there is urban areas of the USA have screwed themselves up with the cost of living. I want to participate in problems, not pay $5k/mo for a 2bdr in NYC or soon Austin or Nashville so I can go to bars with other techies. So if locals weren’t selling at hugely inflated prices, I’d be firmly in favor of that. So, look to the Portuguese neighbors selling apartments first.
But, no excuses - I see $500k 2 bdr in Lisbon and think that’s a chance to live in a world that is way too expensive and commercialized in NYC. A local in Lisbon is getting hosed by that and my mobility, no way around it.
In short - am I part of the problem, what responsibilities do I have vs the locals and govt policies about foreign purchases, do my motivations matter at all vs the outcomes.
I don’t know yet, Hard to say, although it’s good to face hard facts via articles like this. Networked-globalism won’t reverse, and I think it’s more likely the quiet parts of the world (rural America, cheap Europe) are just going to go through some transformations that can’t be stopped and the symptoms look like this article.
We are living more and more in a world where people work but are not able to live with dignity
If you live in any society where land values are private profit, expect nothing less.
We're seeing this in America too, but hopefully with any luck, we still have enough entrepreneurial inertia that salaries (mine especially) remain high enough for a little while longer to make this palatable.
Pandemic came, he stayed in Brazil doing remote work. Found him a few days ago. He told me he gave up going to Portugal and decided to stay in Brazil for now mostly because cost of living there. His initial salary would be 1.6K euros.
> The government has taken desirable measures for foreigners, making it easier for them to get golden visas if someone invests a certain amount of money. My husband, who works in real estate, tells me countless stories of flats left uninhabited by some rich person who arrived at the building, bought two flats so that he could get a visa, and doesn’t even live there.
There are a bunch of restrictions on where and what types of properties qualify. You can no longer buy property in large cities and get the 'golden visa'.
I do not think that is the main driver in large cities. IF these price hikes are indeed driven by foreigners, it's probably other European Union residents.
> Nowadays, flats are being rented in Lisbon for four thousand euros
Yeap. Rented. So why did they bring up the visa thing? You can't qualify if you rent.
Also, housing prices have been increasing all around the globe at the same time economies are screwed up and inflation is rampant everywhere. Blaming foreigners seem... xenophobic? I didn't know Portugal was like that.
For starters, is there enough new construction to satisfy demand? If not, there's the answer.
> (...) And if Brazilians, who must be the largest source of Portuguese immigration, move here
Wait. I thought the problem was rich foreigners? There are rich people in Brazil sure, but I seriously doubt their numbers would even move the needle. The overwhelming majority of expats are _not_ millionaires. If you are that rich, you can have a pretty great quality of life and would only look to live in Portugal if you were really into Europe or something like that. Rich brazilians are more likely to want to have property in Miami.
> The Portuguese are becoming, nothing more and nothing less, the servants of big foreign millionaires
Back to the foreign millionaire thing.
Way back in 2012 I had the opportunity to live and work in Europe. I considered Portugal, but while the country is amazing and the food is good, the salaries were utterly terrible compared to the neighboring countries. It seems that things have not changed.
For example, it claims Brazillians are going to Portugal in large numbers because Bolsonaro...
Except, Brazillians are going to Portugal in large numbers, because the Portuguese government invited them, out of necessity since the country is depopulated and has low birth rates.
I am one of the Brazilians that intend to move to Portugal, and part of the reason is that I am not exactly Brazilian, yes I was born in Brazil, but my family is from Portugal, and I was raised with a Portuguese culture, I just don' t feel like Brazil is my home and want to try going back to my family hometown (Leiria) to see if it is a place that clicks with me.
Lisbon and other metropolises indeed are bad, but because a incredible amount of people want to live there despite lack of enough land there.
https://www.reddit.com/r/PortugalExpats/comments/vy0i5r/crit...
It's proved... controversial! I'd be interested to get HNs take.
And even if you build housing, you somehow need to reduce the induced demand.
* housing production in Tokyo is great, but to put this in context today's Japanese housing market essentially happened after the bubble pop in the '90s. Prices from 1991 to 2004 had declined by 64% due to the pop. In that context, deregulation was palatable because people were already underwater and didn't bother as much to fight things that would lower property values. (In fact, it could've raised them.)
Japanese culture would be my guess.
Portugal has an influx of foreign funds through Golden Visa and similar programs. It should take that money and build social housing that is, at least at first, only open to Portuguese citizens. Think Vienna.
In areas where building is a problem, just use funds to buy properties and turn them into social housing.
I don’t know what restrictions there are on foreign real estate purchases. Personally I have no issue with owner occupiers. But any “investors” (including AirBnBs) should be made illegal or simply taxed into oblivion.
Vancouver, Toronto.
Surpluses are being gathered by the global elite and they are coming back to buy property the locals cannot afford and leave the spaces underutilized and empty.
How on god's green earth we allow our 'land' in urban areas - a very valuable resource to be 'exported' while owners pay nary any taxes ... is completely insane.
We should basically ban foreign ownership, or, tax it heavily and especially require domiciles to be either occupied or to have a tax so that it 'gets occupied' at some rate.
High rents mean that a lot of people like a place enough that they'll fight (economically) to live there. The fact that you've lived in a place since before other people might feel like that should entitle you to low rent, but it doesn't, that's not how markets set prices.
High rents are just once aspect of "unpleasantness", and people will move around till the misery is equally distributed. Economies ebb and flow and shift from place to place, so it the process never ends, but don't be fooled, there is nothing broken about systems of market real estate prices, in a sense they're the final leveling of a system, the equalizer of all other desires.
It's like currency exchange rates, whichever way they go, there's good an bad, can afford more foreign goods but nobody wants to buy your goods, or can't afford foreign goods but can sell exports. But there's nothing to "do" about exchange rates, accept them as given and plan accordingly.
Bad transportation problem in your city? Think the new public works project is going to fix it? Think again, better transportation makes for more efficient redistribution of misery.
Now, I don't mean to sound negative: the redistribution of misery is a leveling, like stock prices going up and down with every trade, there is still a buyer who wants in and a seller who wants out. The redistribution of misery always entails some people getting less miserable.
The evolution of new housing construction over the last years https://www.pordata.pt/en/Portugal/Completed+dwellings+in+ne...
The number of conventional family houses in Portugal https://www.pordata.pt/en/Portugal/Conventional+family+housi...
My opinions: The housing market has been stagnant since 2010 while at the same time interest rates have been low. The population might not have risen a lot since 2010 but the usual trends of moving to city centers, people leaving their parents house (which keep the same house), people wanting new/bigger houses than their parents are still pressures present.
This means there's a big pressure in demand for housing which is not being met by supply which increases the prices. My speculation is that foreign investment has a very low impact in the housing prices, but it's just my speculation. Even if it's a considerable impact, the fix is always to increase supply of houses so that prices drop and we also get foreign investment.
I'm sure the author has their reasons or whatever, but when they make statements like this:
> It’s not easy for anyone to emigrate, to have to deal with and to submited themselves to another culturee. It’s all hard, but to live away from those we love the most its the hardest.
It's just incredible to me that someone would act against their own economic interests so blatantly. The greatest innovation of the EU is free movement, and this person is unwilling to take advantage of it to escape economic hardship.
Obviously my mindset and the author's mindset have irreconcilable differences.
I think how the author keeps using "foreign" as an insult reveals something about their thought process:
> policies that benefit foreigners more than their residents.
> the majority are foreigners who are not there for a visit, but who live there.
> large public companies were sold off to Chinese managers who now do whatever they want
> The Portuguese are becoming, nothing more and nothing less, the servants of big foreign millionaires
> My parents are very family oriented and were somewhat upset when I left my home country
Also you:
> It's just incredible to me that someone would act against their own economic interests so blatantly
It appears you didn't adopt your parents' family values. Nothing wrong with that, but I don't think the strong will to remain near one's roots SHOULD be all that "incredible" to you.
I'm also the child of immigrants, and left their adopted country for another for "greener pastures". But my parents left their home country to escape tyranny, not just economic incentive. They did the hard thing because the other option was dangerous.
Are we really at THAT point? Are we doomed to always run from the tyrant, or can we build a different society where families don't have to be split up.
I think your post is a bit self righteous. Perhaps the demand for your skills in other countries made it easy for you to immigrate. Most cannot do that. They're stuck there, and I think are reasonable to want their country to do a better job supporting the quality of life of it's residents rather than treating them like peasants.
I have yet to meet the child of a Jewish family who does not intimately understand this, given how frequently those families often had to move, while staying extremely close.
Many young Portugueses fail to benefit from being part of the EU.
Flint's population has rapidly declined over the past 40 years and continues to decline (its population is less than half of what it was at its peak), so there's not a population boom driving up demand. Flint is not exactly known as a tourist destination either. And to top off, Flint is most well known for its contaminated drinking water that contains lead. So why on Earth would such a place be experiencing a housing shortage?
The obvious answer is that governments around the world have brought interests rate down to zero, which forces investors to seek out riskier and riskier assets to invest in. Instead of investing in traditionally safe assets like treasuries and bonds, investors now have no choice but to invest in stuff like tech startups, cryptocurrencies, personal loans, mortgage-backed securities, and dilapidated houses in the Midwest.
We see it time and time again. Policy makers try to address the symptom but not the cause, then people cry when nothing gets fixed.
The investor class inflates the value of the assets, meanwhile the working class are just struggling for a place to live.
- Increasing income inequality short-circuiting the backpressure role of market pricing (and, more specifically, the use of home ownership and immigrant-investor programs as a way to sidestep restrictive immigration systems)
- Countries attempting to replicate the American suburban lifestyle, which is economically unsustainable as voters are incentivized to constrain supply in favor of "line go up"
- The economic gravity of living in a large city.
The econ 101 explanation of markets is that increasing price lowers demand, but this is determined by the "elasticity" of the supply and demand curves. The shapes of the curves determines what the market will do when supply or demand shifts. But if these curves are straight lines, or "inelastic"; then suppliers or buyers do not compromise on quantity and the market gouges people.
Supply is inelastic: most cities are hostile to redevelopment and all the economically-viable land in the city has been used up. No matter how expensive housing gets, people will not be able to build more of it, so price goes up more. In fact, when housing gets more valuable, there is more political resistance to increasing supply, which makes prices go up more.
Demand is inelastic: most housing buyers need to own a house. Homelessness is at best inconvenient and at worst illegal. Moving out of a city is expensive, and will require finding new employment, possibly at a lower hourly rate or salary.
The end result is that the housing market works less like a market and more like NFTs pre-a-few-months-ago. It is politically engineered to ensure quick and profitable exits for the vast majority of homeowners. However, this process cannot go on forever; because eventually home costs will outstrip wages, which puts backpressure on the whole "line go up" thing.
This is where the rich and powerful come in. They do not respond to pricing backpressure the same way you or me do. If a flat in Portugal is a million euros instead of half a million, who the hell cares? They can afford it anyway. They represent "greatest fools" - people who can resolve a speculative bubble by just buying the asset and not caring about it.
It's also kind of a mistake to say that "the Portuguese can no longer afford to live in Portugal". The population is not a monolith; it's more correct to say that today's middle class Portuguese cannot afford to live in their own country, but prior decades' middle classes absolutely could have, and the price inflation in the housing market is specifically to the benefit of those people.
Really, where? I thought only fractions of the anglosphere replicated this (like parts of Canada). Extremely few Europeans would want that lifestyle, for instance. The trend seems to be moving aggressively in the opposite direction, with large and dense cities attracting the majority of new people.
Additionally, Portugal is suffering from high taxes (because everyone tries to avoid paying them, it's a vicious circle), and low productivity (they are working a lot, but ineffectively and in the wrong industries).
Almost 10% of the population have emigrated to the rest of Europe and they have every right to do so, just like all Europeans have the right to live in Lisbon.
And for the Brazilians being picked on in the article - Portugal could never finance its completely unsustainable social security system were it not for the influx of foreigners working there.
What's really needed is to address government corruption, fighting tax avoidance, lowering the taxes and increasing social housing projects. But this is very difficult to do.
Does anyone know other good reads to get a better understanding?
[1] https://www2.deloitte.com/content/dam/Deloitte/at/Documents/...
Why does anybody limit supply of housing to the point that prices rise?
The French did a bad job at building satellite cities, but done right, you could connect new housing to the city center like the original Los Angeles street cars.
If jobs don't pay much then you also don't pay much to the builders of new houses which makes them affordable.
Things will probably shift when the proportion of renters significantly outnumber the home owners.
If your power goes out or there is a water leak in your home, you need an electrician or a plumber. Preferably one who doesn't have to live five hours away. If you need an ambulance and medical attention, you need doctors, nurses, and medical personnel. Hopefully they didn't get priced out of a 50 mile radius of your home.
And if the world consisted of only millionaires and an army of robots, if everyone is a millionaire, no one is. A carton of milk would just cost $700 and a lower end house $30M.
Be a YIMBY. Embrace looser zoning regulations and more and denser housing where you live. And don't jack up the rent to market rates if you're already turning a profit.
FWIW the electricians and plumbers are the ones living right next door to the techies. They charge ridiculously high hourly rates and there aren't nearly enough of them, so they can keep raising their rates almost without limit. Try to find a decent electrician for less than $150/hr (this is SF Bay Area). A refrigerator repairman will charge you $300 just to walk in your house and diagnose an issue.
Eh. Waiting for people to forgo short-term profit from the goodness of their hearts under capitalism is a losing battle. The system must be built to prevent such behaviours and outcomes, rather than relying on individual good-will.
You can either have a housing market or you can make sure everybody has affordable housing. But that means making housing a public good rather than leaving it up to investors, but this requires the opposite of the austerity that was imposed on Portugal during its debt crisis.
If you think that's utopian thinking, consider Red Vienna and its housing projects which continue to exist today and still provide affordable decent quality public housing in the city: https://en.wikipedia.org/wiki/Red_Vienna
Inflation is occurring at higher rates in some countries than others (cough Estonia, Turkey for example) and Portugal is not exceptional in this respect. The starting salaries for doctors in the Portuguese SNS are terrible, at around 1800 euro for doctors and 1200 euro for nurses. This is insufficient for living in Lisbon or Porto, as the author would agree.
Source: I am Portuguese. I live in central Portugal.
I do not like the authors apparent intentions in trying to incite anti-foreigner sentiments. Portugal has chosen it's own course here, from the Golden Visas to the over-reliance on tourism. Lisbon has it's own management problems that I won't dig into, but suffice it to say that certain places like Lisbon or Porto have become rather expensive, while the majority of the interior of the country continues to be less-inhabited. Our train services were gutted when the public system was privatized and the concession given to a single company.
Monopolies run rampant in Portugal.
Uniquely complaining about PORTUGAL being unaffordable for the PORTUGUESE is such a Portuguese mentality, I can't even. The author needs to live abroad in some other countries for awhile and see how much this is a general issue relating to so-called NICE CITIES becoming horribly expensive. No doubt, we will stop being fashionable at some point, when the "next" cool place becomes king, so the real question is whether we will begin manufacturing and developing other sectors of our economy beyond raw-materials export (low in the capitalist pyramid) and tourism. Make furniture to sell, rather than exporting the timber, so to speak.
I love this complaint. It's so perfectly a demonstrations of itself. It's somehow as if, suffering a problem that someone else suffers from, means you're not allowed to even discuss it. It's also hardly unique to Portugal. Most countries discuss domestic politics in terms of the country, because they have say over the policy of non-domestic territories. (Usually - colonial empires excepted.)
Obviously there's local factors like Lisbon's desirability to foreigners, but from a global perspective, in the developed world...?
What am I missing?
Lisboa and Oporto are hideously overpriced, and it is indeed hard to see how a normal Portuguese earner can afford to live in either. Even Vila Nova de Gaia, which was the “cheap” side of Oporto, is now parlously expensive.
This effect has bled along the coast, and many coastal villages now ask €200k for an unmodernised one bedroom house.
But… the interior of the country is still facing depopulation, and property prices and rents here (between Bragança and Miranda) are still low. A five bedroom house in a town in decent condition can be had for €100k. There’s a beautiful 16th c. T8 palazzo needing modernisation in our nearest town for €80k.
People don’t earn much here, but they don’t spend much, either - a lot of food is home grown or hunted and bartered, heating is from firewood, and most folks drive perhaps 50km in a week, as they live within walking distance of where they work. Almost every house that’s had modernisation done uses solar for hot water and to supplement power. They deployed a gas network four years ago, and shuttered it last, as nobody is using it. Property taxes on the above properties are about €100 a year.
They’re desperate for people to move out here - lots of vacancies, not enough people to fill them. They’ve rolled out gigabit fibre to the villages, which they are literally giving away. We’re the only estrangeiros in the county, bar returning Brasileiros.
So. The reality is that which is being played out all over the world. Cities are becoming unaffordable for mere mortals - and, in my view, that’s ok, as cities are past their useful life as industrial hubs and have principally become destinations and speculative investments.
I’m not advocating some sort of “return to the land”, but rather that people are going to have to consider that perhaps they don’t all have to live in the top 5 cities in their country.
Sure, I can’t get takeout here, but I can breathe fresh air, sit at a quiet cafe and chat with my friends in the village without enduring traffic whilst drinking my €0.60 coffee, and support local businesses run by local people, rather than vast corporate chains.
Since we’ve moved here, particularly during the pandemic, we have seen quite a few young Portuguese couples move here from Oporto - some with family ties, some without - they’re starting businesses, families, renovating old abandoned homes. It’s genuinely exciting to see the beginning of something.
The pendulum swings, the market speaks, the world turns. Sure, we may be facing down collapse - of the current way of doing things. Not of all things.
Edit: just to demonstrate the veracity of my statements re property prices here: https://www.idealista.pt/comprar-casas/braganca/vimioso/vimi...
(1) Bar agriculture and remote work, there are very few jobs in the interior of the country. I think in this forum we may have a skewed perspective since our sector is by far the one where remote work is most common. But most people simply don't have the option to earn 10x minimum wage from their computer while sitting in an idyllic mountainside village.
(2) Many people like living in rural areas. That's great! But many people also do not. I like nature walks and mountain biking and clean air as much as the other guy, but I also like restaurants and classical music concerts and nights out. I sort of have that right now by living in a rural area 10m away from a mid-sized (150k pop) town, but I don't think I would like very much to live in the middle of Trás-os-Montes for more than a few months.
Some people just don't think very highly of "flyover country". The culture is not what they're used to. Return to the land makes a whole lot of sense though, now that the basic infrastructure for hybrid remote working is pretty much ubiquitous (courtesy of COVID).
That's exactly what I saw when I was looking at properties there. And honestly the towns where some of the cheap properties were, were not half bad. They looked like they had all necessary amenities. I can't speak for their job markets though, which could be the main reason for the issue.
When I transition from tech, I hope to spend my time building affordable housing in Portugal and Spain.
I think it's an interesting question: why are there only a handful of "top" cities? What can we do to make cities that aren't desirable, more desirable?
Well, compared to capitals in some countries in Europe, that is still cheap! Try half a million for a completely empty run-down flat.
I think Portugal was just late to the game, but the playbook is the same.
All major cities in Canada, NYC, London, Hanoi, Bangkok, Naypyidaw, and so on and on.
Every nice city is extremely overvalued.
I wonder how this will impact "golden visas." Personally, if moving to Europe, I would be a little concerned about short-term energy insecurity pretty much anywhere except perhaps the Iberian peninsula. I think they'll find a solution, but it'd be hard to make such a big bet on without certainty.
I think this title is a bit sensationalist. It's true that a middle class Portuguese, with the extremely heavy income/property taxes we have to pay, will find it very difficult to live in Lisbon's or Porto's city center in a medium-upper apartment.
Lisbon (and even more Porto) do have an extensive metro line though, and you can rent/buy an apartment on the outskirts (although still served by metro line), even with the low liquid wages. But more than that, vast areas of the country are extremely deserted and housing is extremely cheap there (a similar house in the interior goes for about 20% of one in Lisbon/Porto).
Also, there's the problem of the government having destroyed most of the middle class to embezzle the metric of the "minimum wage". Constant mandates to increase the minimum wage (and very heavy taxes on anyone that earns more than that), make so that companies can't discriminate between good and bad workers. Most workers get paid almost the same, and as such, there's no point in trying to be a better worker.
I'm one of the "lucky ones" because I bring home about €2000/month. My company has a total cost with my salary after taxes and other state contributions of €3880/month.
Now, I know that you can have the argument that we get a lot of "free" services in return, but, sadly, no, we don't. Decades old mismanagement (governments use these "free" services to cater to their party members and get them nice administration positions for which they don't have any experience) and some outright corruption, destroyed the quality of most of these "free" services.
The SNS is in absolute shambles. Our mortality rate is the highest since 1913 (ok, you can attribute that COVID). Our infant mortality rate, the highest since 1982 (sorry, but you can't say this one is due to COVID). Now, what happened to cause this? 7 years ago, we got a center-left government into power, one of their first measures was to destroy a system where the hospitals were public, but the management was done by a private company - these hospitals had much better metrics for both costs and quality of service. They abolished that, and replaced the hospitals' administration by party members. This is the result.
Like it happened with the SNS, similar stuff happened in a lot of other areas. In the end, the government's answer is always the same: increase taxes - which strangulates the economy and destroys the middle class, and, funnily enough, transforms us all into people dependent on "government's money" and their subsidies - that ensures that they keep in power because nobody can imagine living without those "free" services with the low liquid wages we have.
Tangential, but I recently visited lisbon and realized how terribly mismanaged the airport is, as well as TAP Air (Portugal's flag airline). Everything should be well, because it's a pretty big airport but yet it was a mess, and delays of several hours was apparently an every day experience (which I learnt the hard way). It did give the impression of having root causes in corruption and complete mismanagement of public funds.
I'll just comment on the taxes, as someone who owns a business - yes, they are high. But not that much compared to the rest of Europe. I'm sure by now you're thinking "but other countries make a lot more money!!" - and that's exactly why taxes are high here. Our GDP is much lower, so if our tax rates were also lower, how would the government afford machines for hospitals, vehicles, fuel, and so on when all these things cost the same as elsewhere in Europe? The only thing that is significantly cheaper here is labor, after all...
Yes, things aren't good. But there's no easy solution either. I personally prefer to pay higher taxes than to compromise our public services further, or privatize them in a fuck-the-poor way.
Yeah. Given that the large cities no longer qualify for 'golden visas', I think the government wants external money to go to these areas.
> Decades old mismanagement
That's quite sad to hear.
I was (guess I still am) thinking about moving to Portugal at some point, perhaps for retirement. Every single person I have ever spoken to... they can only sing praises to Portugal. Sure, sometimes they complain about bureaucracy. That's probably worrying, since most are brazilians and we supposedly used to that. If they complain, that must be bad :)
I really hope Portugal will get better.
Not to retract from the article, but the city center on the capital are never supposed to be affordable for the middle-class anywhere in the world. This is the most premium space of the whole country where everyone wants to live, and housing is limited, so only those able and willing to spend top money (e.g. the wealthy, not the middle class) are usually able to live there.
The "Business district" is only relevant to new york and other big financial centers
What I see are vast numbers of uninhabited, decaying or wholly uninhabitable structures. I see 50+ age men loitering around the town, drinking beer at 10am, and playing scratch-offs.
On the roads I see absolutely bonkers drivers who have old cars which obviously have binary gas pedals. They go super slow for no reason, but at some point they flip the switch and drive like maniacs, blind curves be damned. These cars, by the way, are 80s and 90s soot-spewing diesels.
They start fires more often than mother nature does. Sometimes it's because they are crazy, but usually it's because they want to clear a natural forest so they can grow fast timber like eucalyptus (which greatly exacerbates the fire risk since they are so grow fast and are highly flammable).
VAT here is 23%. This thing about foreigners not paying tax is bs. Locals widely use a tax scheme whereby they can make tax claims on their purchases, getting some of it back. Without that tax number, you pay the full 23%.
And if you want to use a visa to live and work here, you will pay an incredible tax rate that's even higher than Netherlands (which is already 20-50% higher than the US).
Many of the "rich" foreigners coming in and buying property are Brazilians, some of whom got their riches through corruption or outright criminal activities.
There is also still good old fashioned corruption here. The laws regarding many topics such as land habitation permits vary by jurisdiction, and the common way to deal with them is to get cozy with the mayor or other important figures. Take them to dinner, buy them some gifts, play nice. You can be completely legal, but if you don't play the game right you can be denied a permit.
This is all pretty bad news, but that's not to say that Portugal is bad or Portuguese are bad. There's a lot to like here. There's a lot of charm, a lot of history, some great beaches and villages and mountainous areas. The climate can be nice, but imo it's not great and rapidly getting worse (many days this summer over 40C, and so, so many fires).
My takeaway is, to put it very bluntly, that the average Portuguese person is quite ignorant. They either don't know a lot of important things, or they know a bit but don't care (because they don't know why it's important). It feels like time stopped here in the mid 1900s.
Porgugal was once the king of the world. Then it had a several hundred year decline, reaching bottom in the latter 1900s. The younger generation learned it was better to move elsewhere to earn money, so progress ceased locally. But 10 years or so ago, the younger people who are now middle age began coming back, starting businesses, and revitalizing the country. It's going to take a few more decades before Portugal reaches the point where it is not a poor shadow of its former self. I'm not sure it will ever make it though.
This is quite true, we are ranked very low on things like financial literacy, and most people here don't care why things are the way they are.
Is this the catch then with those "golden visas"? Could you or someone else say what those rates are? Is Spain which also offers "golden visas" the same then in terms of a separate tax?
The level of "rich" necessary is quite low.
but if you want to help the cause, you can also achieve a golden visa by employing Portuguese people, instead of buying a flat.
Building more homes would help, of course, but all the expats want to live in the historic area (it seems), so those prices will still be driven up. From my visit there, a lot of the older folks were the ones still living in the old downtown area, waiting to be priced out of their homes.
If workers can't afford to live in what were the important cities, they live elsewhere.
Eventually employers move to where the workers are. The formerly important cities become tourist meccas like Venice or Granada, or ghost towns.
This is happening to London and Lisbon, and to a lesser extent to Amsterdam, Paris, New York and San Francisco, and other cities.
It's a pity, because the famous cities got big early because they're in good places for trade. Their replacements are second best in this regard.
The sad thing is that this has been done by one generation to the following one, parents impoverishing their own children. Not intentionally perhaps, but they have created the artificial supply side restrictions through planning laws and nimbyism that have resulted in their childrens impoverishment.
One of my friends is paying half his salary in rent with his own house impossibly out of sight, while his parents own multiple properties and rent them out.
What we are seeing more globally in Europe is the disappearance of the middle class. For the last decade this middle class had to bear all the tax (so that poor people can be lifted out of poverty and protected by the system), no reduction, no possibility of evasion (like rich people have), increase of food prices (permanent), electricity (now) and the doubling even tripling of the cost of real estate while our salaries barely grew. Entry level salaries in France or UK or Germany are not that different from 10-15 years ago while everything else exploded in cost. Add to that the fact that your city attracts foreign rich people and investments and you done. Paris real estate is a joke and the city only ends up with rich people and very poor people (hosted in projects) the middle class has to move to suburbia with limited infrastructure , doctors, things to do (obviously a nice suburb will be paris prices if not more).
In the USA you can still make a six digit salary doing blue-collar work (hard one) and many jobs pays high 5 digits for a middle-class worker. Not even talking about software that is really a class-climbing profession that we definitly don't have in europe (software doesn't pay here and its very rare to go six digits while in HCOL cities of USA its standard year 1 pay)
at the end most of the 10year ago middle class became a class of white collar workers that live paycheck by paycheck and when the economy will tank in the coming months many will go back to poverty as soon as they loose their jobs.
1) it's a nice city with nicer weather than most of the places within convenient travel range 2) the economy is remarkably unproductive, leaving Portguese people poorer than, say, Estonians, let alone Germans:
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?location...
Americans can no longer afford to live in America! Manhattan and San Francisco apartments cost over a million dollars!
This is a total waste of time, I wish I didn't read it.
If you are Portuguese you get the right to reside in Portugal for free. Everyone else (apart from EU citizens) must buy it.
Is all the economic activity concentrated in this city or is it a case of Portuguese professionals working in the city being outpriced by investors for AirBnB ???.
Outlying suburbs away from the CBD must be more affordable - why is this not an option ???.
There is a reason anyone outside Porto/Lisbon here complains that Portugal is only Lisbon/Porto, the rest is scenery. Which to be honest, if we look at the investments made throughout the country, it is quite accurate.
A queue operating at max capacity had infinite average waiting time, this is what we are experiencing right now.
The rule of thumb is to never operate at more than 80%, or the waiting time of your jobs starts to increase dramatically.
Does Portugal have US style NIMBYs ? Why not build more housing
Sounds like Golden visas worked at attracting foreigners, raising Portugal’s land value, and incentivized citizens to move to depopulated areas
Yes, real estate prices are nuts right now. I have no clue how my kids are going to find places to live when they want to move out, but I can tell you that a lot of that is just plain and simple greed from builders and homeowners who often refuse to maintain (let alone re-paint or improve) existing buildings.
There are also political aspects to how zoning and development takes place, but those vary so much depending on region and party lines that I’ll just call it lack of political responsibility (also, most people outside the extreme left or right don’t want to get involved in politics, lobbying or economic discussions).
There was a very big emphasis some 40-50 years ago on building thoroughfares, regional transportation, and nationalizing what passed for core industries, but all roads led to district capitals at the expense of doing actual regional development. Efforts to foster or sustain most industries largely failed (although there are echoes of those in current startup support programs, and some regional programs of note), so young people gravitated towards the shoreline (and towns, and the services industry) and the countryside just aged away.
I have been thinking of moving out of Lisbon to a smaller town (property prices are tempting), but health, shopping, etc., are just not there, because everything of interest (brand and specialists stores, entertainment, etc.) is mostly only available in district capitals, and most large companies only have offices in Lisbon or the mongrel outskirts of it, in business centres that are only reachable by car and lack decent public transportation.
So that makes it hard to get a decent paycheck outside Lisbon and Oporto, unless you’re willing to become a chattel to some lobbies who are sponsoring local colleges hoping to get cheap tech labor out of new graduates, paying them just enough to stick around.
A good summary of all the above is what happened in a district near Lisbon —- a previous mayor (who went to jail for corruption and actually got reelected afterwards) supported the creation of malls, business centers, etc., but punted on public transportation (leaving a local university center effectively stranded) and futzed about with zoning to allow premium villas to be built.
I have been expecting the Lisbon real estate market to crash _hard_ for a while now, but people with college degrees are somehow managing to pay rent or mortgaging other family assets to buy flats in the city. The rest struggle, of course, and are pushed out to the suburbs.
I wonder for how much longer things will stay this way. Portuguese are becoming more technically literate on average, so that gives me some hope, but I just don’t see the overall economy evolving beyond the primary industry/services and tourism dichotomy, no matter how many tech unicorns spring up and bring expats here.
(On that note, Portuguese wages, even in FAANG companies, are merely a fraction of our US, UK, German and Swiss counterparts, and that can’t be explained solely through cost of living comparisons… but that’s a completely different discussion)
Which has happened everywhere before. Americans can no longer afford to live in NYC and San Francisco. Canadians can no longer afford to live in Vancouver. The Spanish can no longer afford to live in Barcelona. The French can no longer afford to live in Paris.
Professions become obsolete. Your entire career can be for nothing. The city you have live for all life can suddenly get an economic boom, but you do not work in a booming industry, so you won’t share the profits.
(It happened even when capitalism has been taken out of the equation. Do you think the Soviets could afford to live in Moscow? It was a pipe dream for most of the population).
This has happened many times before. Such is life.
The market is mostly driven by portuguese government offering low taxes to people retiring in the country.
This won't be sustainable in the long run as all those people retiring now likely got less kids than the previous gen and will gonna die soon. This is a bubble that will pop in the next 20years when the amount of people dying and properties being put on sale will be much greater than people willing to retire there.
Also it is not like all these properties sold didn't benefit portuguese people.
Same (theorized) dynamic. Retired people dying.
The notion seems almost quaint in light of current events.
The UK could desperately do with this, too.
All day long: we’re moving to Portugal from the USA!
Tell us more!
Yipes! :-)
Canada has a well-developed and diversified economy. Portugal needs to import a lot from the world, but has very little to offer in exchange.
They found something: their real estate and city center spaces.
The country NEEDS this foreign income. It's not a self-sustainable economy and the world won't work for them for free. If the Portuguese want to solve this issue, one way is to study what else could they develop internally that would be attractive in the world trade market.
Also, foreigners are looking for the European passport, not for Portugal per se. If Portugal were to follow UK's path, demand for their Golden Visa would drop dramatically.
It doesn't benefit the rich, only. By raising real estate prices, it stimulates the construction business, which is labor intensive and has a long supply chain. It benefits the entire economy of the country.
> It's barely right/left at all, it's just nihilistic power as its own end.
These statements are skillfully leaving out "ethno" part of nationalism. Once you add that quite obviously real and active element back, it's very much a left/right difference.
The left's solution to the problems brought about by globalization is to subtly bias the scales of re-industrialization policies toward the domestic labor market - evidenced by things like the battery materials sourcing and assembly location requirements, and income limits of the recently passed EV tax credits.
The right's solution to this has been playing on fears of a purported invasion by non-white citizens from lower income countries. A decade ago that would have been a controversial claim to make about the right, but today's right openly proclaims those ideas.
Portugal's case is interesting because they lived under a nationalist dictatorship that only ended in 1968, so many people alive today remember living under that. In my travel there, I found that many people in the age groups that vote heavily conservatively in the US and UK instead vote democratic left as a result of their lived memories of nationalist dictatorship.
Portugal does need to figure out what else has to offer the world economically in addition to great weather and beautiful cities and countryside, in order to have a better balance of trade, but it's unrealistic to think it can do that while shutting down immigration.
There are also countries like France which only imported cheap and poor labor. France never tried or even discouraged rich people to settle in the country with punitive taxes (compared to our neighbors and other western world countries). For instance London has (or had) rich Russians/Indians/Pakistani investors who made London their residence, not the case for Paris, foreign real estate owners don't take French permanent residency.
And nowadays, we are left with some politicians who promote economic immigration even when there is no need or deny any form of control on illegal immigration mostly to import voters.
Oh, and tax the unimproved value of land and give the proceeds to the Portuguese citizens. This will dampen the effect while supply of housing matches demand.
I know parts of UK has also experienced the same thing from my relatives there.
And speaking of Government, we have a similar left wing government which is only left wing by name, and its policies has exacerbated the housing crises.
Everyone said our housing market is in bubble for last 5yrs. But bubble has never popped. So I guess it’s something else. In Toronto and Vancouver there were ample evidences of Chinese snow washing money and buying up real estates under shell companies.
Madness.
It's a shame that the continent that was once the birthplace of democracy, the scientific method, the industrial revolution and socialism has been reduced to nothing more than an open-air museum for wealthy Americans and a refugee centre for the victims of their wars.
We need strong leaders who will put Europe first.
Step 2: sell out your country to wealthy foreigners to "stimulate the economy"
Step 3: act surprised that you can't afford living in your country, that got sold out to wealthy foreigners
What a fucking disaster. Selling off national assets to foreign investment groups.
>China Three Gorges Corporation, a SOE, won in December 2011 the bidding for the Portuguese government's 21.35% interest in the company. The transaction is expected to be concluded by April 2012. As of February 2014, just under 45% of the ownership of EDP was controlled by five institutional shareholders. Amongst the others were the Qatar Investment Authority and BlackRock.
Qatar, China, BlackRock. Can't find a better bunch.
Blame also the eagerly colaborationist Portuguese government from 2011–2015.