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Comment by dougmwne | Hacker News Reader

Sounds like the Portuguese government should start building flats as fast as possible. Other countries in the EU do it and it works.

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Unfortunately in Portugal as in almost everywhere else the government has little incentive to do so: as the ruling class is comprised almost entirely of wealthier people with lots of assets, they (1) don't suffer from the insane housing prices and (2) indeed as proprietors benefit from the surge in housing asset prices.

Sure that is a headwind, but it's certainly not impossible to get your government to work for you instead of against you. While there are many examples of hopelessly corrupt, democracy-in-name-only governments, there are also governments that respond to the needs of the majority to keep from getting thrown out in the next elections.

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.

As a relatively poor country (for European standards) with, crucially, a lot of debt, it is very difficult to go for massive public spending projects as would be construction of enough public housing to bring it to the aforementioned 20% goal (there are actually proposals to this effect in Parliament), even though this would (1) help control the housing crisis and (2) actually easily turn up a profit in the mid-long run.

The EU could change all of this and go for true European cohesion with Eurobonds under the blue/red proposal... but that's another story ;)

> 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.

Well but do they? Where is the evidence that golden-visa/NHR recipients have actually helped create jobs, invest, create industry...? In fact, there appears to be evidence to the contrary: https://www.publico.pt/2021/12/25/economia/noticia/vistos-go... (translated: "Golden visa: in nine years, the program created 241 new jobs. Investments which led to the residency permits since 2012 amount to 6000 million euro, the vast majority of which went to real estate")

To your second point, that’s a policy problem. You can tax these golden visa real estate investors at any rate. You can have a different tax rate for nonresidents and an extremely high rate to penalize non-occupancy.

The country might be poor and in debt overall, but somebody is getting rich off this real estate bubble and it is within the government’s power to make them share.

I'm pretty sure you hit the nail in the head right here.

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.

What EU countries? The only ones I am familiar with have housing prices spiraling out of control just like in Portugal.

I believe most EU countries do this in some form, but Austria by far has the largest and most successful public housing scheme. It is very effective at controlling prices.

How so? It makes it cheap for the people inside the system but expensive for those that are outside of it. You don't solve a housing crisis by essentially subsidizing the cost.

No, the Austrian government builds a large amount of housing, which increases the overall supply of housing. People living in social housing do get lower rent prices, but having a massive builder in the market that keeps pumping out new inventory helps to make it a buyer’s market and keep prices low. Simple supply and demand.

Austria. In Vienna, for example, 44% of the rental stock is public housing.

In Amsterdam 57% of the rental stock is rent-controlled housing (capped at below €800/month). But that doesn't help at all when you don't keep building more: the average time on the waiting list for a new allocation is 13 years, and rarely move out. And if they do move out physically, it's popular to not move out administratively and illegally sublet it for a lot more than that they're paying (that's the story I've been told by locals).

Probably quite hard, seeing as all the Portuguese builders are over here in Switzerland (since they get paid very well compared to Portugal, but really badly compared for Switzerland) /hj.

(Probably similar for other EU countries with high relative purchasing power)

Dunno where it works. Prices are going through the roof everywhere in EU - and maybe the whole world - compared to wages.

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.

I doubt that even 30% of people would consider having government as a landlord good alternative. There are so many news of poor management that depending on the government to fix your plumbing in your house seems like a nightmare scenario to me.

This is actually a good role for government intervention. The exact mechanism is not important, but the concept is. Builders tend to be out of cycle with housing need due to the length time it takes to get a project to completion. After a bust, they get very skittish and underinvest for the first half of the cycle creating a shortage and boom. Government can provide a base level of housing builds to make sure the market doesn’t go too deep into shortage. And it doesn’t have to literally build them itself, just run programs that keep building housing. Ideally it even pays for itself.

It makes sense your idea on itself but in the case of Portugal would not have worked. The market bust happened around 2002 and then the government had a debt crises in 2010.

As it's common, the housing market reflects many errors and not just one.

We can't even afford to pay doctors to keep the urgencies open

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