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Comment by tuatoru | Hacker News Reader

Yeah, facts. Demographics explains most of what's going on.

Portugal's working age population is declining[1] while its 60-plus population is increasing.[2]

Old people own most of the real estate and don't care much about workers. They also tend not to like change, which immigrants bring. So they dislike immigrants despite depending on them.

(//TODO: find papers supporting these assertions: they're factoids of the "everyone knows" type.)

1. https://population.un.org/wpp/Graphs/Probabilistic/POP/15-64...

2. https://population.un.org/wpp/Graphs/Probabilistic/POP/60plu...

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> Old people own most of the real estate and don't care much about workers.

Lisbon's local government is renowned for being the largest property owner in the country, with over 60% of Lisbon's real estate owned by the city.

> over 60% of Lisbon's real estate owned by the city

I'm from Lisboa and this can't be true unless you're using some very strange definition of real estate. What's your source for this?

Maybe counting unimproved land?

Maybe counting by square footage of roads?

I'm struggling to follow your arguments.

"Boomers don't like immigrants/workers, therefore life is getting really expensive" doesn't really sound like good reasoning.

If the population is shrinking, demographics doesn't explain it by itself. Housing should be getting cheaper if there are less people competing for it. There must be another factor here.

You’re forgetting household size.

As with all wealthy countries, household size has fallen in Portugal over the past few decades, so the same amount of people needs more house. This is especially true in the context of empty nest retirees.

So that could be one of the extra factors that we're looking for. People want/expect more, which has caused people to have to pay more. But I'm doubtful that it is going to account for a lot of the cost of living issue in Portugal.

I'd still like the GP to connect the dots for me on his "it's all demographics" argument. It sounds like are argument you hear on Reddit.

I think you're missing the point.

For example, when my siblings were kids we all lived in 1 house. I have 3 siblings so there were 6 of us including my parents. In 1 house.

As we graduated from college we moved out. Now there were 6 of us in 5 houses.

Beyond the raw house count, you're going to need more space. Multi-bedroom homes have shared common space. The house we grew up in had 1 dining room, 1 kitchen, 1 living room, 4 bedrooms, and 2 bathrooms.

If we each moved out on our own, we now needed a minimum of 5 dining rooms, 5 kitchens, 5 living rooms, 5 bedrooms, and 5 bathrooms.

The number of people is the same. Still just 6. But we needed more housing and more space since we didn't share common space anymore. We didn't expect more than we had before (well, beyond the practicalities - it's difficult to share a bathroom with someone you don't live with), we expected the same as we had before we moved out.

You don't need a dinning room. That's a luxury feature. It is possible to share bathrooms if you build housing more like school dooms or single room occupancy.

Having a place to eat at home is not a luxury feature, unless the city has a population density that is high enough to support having a broad array of dining options that are open for most of the day. Tokyo is one example of such a city, but having restaurants that are open 24x7 is not common at all in Europe.

Having a place to eat != having a dining room.

Growing up (middle-class; both parents were teachers), we used our dining room to eat maybe 3 times a year. We ate around 1000 meals/year at the kitchen table and maybe 3 at the dining room table.

Most younger people share accommodations (e.g. have a roommate). Most older people share accommodations (e.g. have a family). There is also some, for the lack of a more sensitive word, attrition as time goes on. Yes, your family has grown and the amount of space your family needs in order to maintain their quality of life has increased. Yet it has only increased by a relatively small amount.

I am also going to echo what was said earlier: dining rooms are not a necessity. They are mainly intended for people who entertain guests. Many apartments and smaller family homes don't even include a dining room, since the expectation is that people will eat in the kitchen.

Housing supply doesn’t grow by all that much though, so a “relatively small amount” is enough to tighten a market.

In any case, censuses define a household as people living together in a unit, which would account for roommates. Portugal has gone from 3.7 in 1960 to 2.6 in 2011. Housing 10.3M people at 3.7 requires 2.8m units; 2.6 requires 4m units. And that may be just what Portuguese people have to put up with, but not their desired end state; if they were at the EU average of 2.2, then it would require 4.6m units.

Yes, I think I was missing your point.

I think that your thrust was that smaller average household sizes means more dwellings are required. This is a good point.

Shrinking average household sizes could be explained by the shrinking size of the average family, or it could be explained by shifting expectations, by people wanting more.

If you take a population where all single people are willing to live in share houses, your average size of your household goes up. If all the single people expect to live in their own apartment because they want their own space, own bathroom/kitchen, then this would drive down the average household size.

I would expect both of these dynamics to be at play here. Average family sizes are decreasing in most developed countries. People's expectations have also risen with regards to housing.

I wonder what effect each has on the demand for housing in Portugal?

BTW: Your personal example is possibly a good example of shifting expectations in society, whether you recognise it or not. Every sibling moved into a place by themselves? Did no one move into a sharehouse? I probably do not live in the same country as you, but it used to be in my country that when you first move out of home it is not the norm to live by yourself. What's the norm these days?

People definitely want to live by themselves even if they cannot afford to, and other things also factor into it.

(Disclaimer, I'm American, so can't speak directly about the Portuguese experience.) But as an example, at this point I don't remember the last time I saw a bunk bed in a non-dorm room setting. This used to be extremely common in low-income housing in particular [1] but as an example I have never, ever seen anyone share a bunk bed with a stranger.

One other effect is location, location, location. In Lisbon in particular, like most European cities there is generally a height limit imposed on most of the city (higher than most places in the US, but not so high that tall buildings are allowed). There is only ten buildings above 80 meters in all of Portugal. If your building is so short, there is only going to be so many ways to subdivide it before you can't split it more to accommodate people.

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[1] - a historical photo of an NYC tenement: https://media.gettyimages.com/id/640482741/photo/bunkrooms-i...

Besides what bcrosby says, old people hold on to real estate "as an investment". In many cases they actively prefer that it be unoccupied, because occupants complain and want repairs done, and so on.

Or, in the case of "world cities" like London, wealthy (nearly all old) people from shaky and shady regimes around the world buy them as places to escape to if need be.

As well as falling household size in occupied dwellings, the proportion of unoccupied dwellings in these cities increases far above the percentage normal for the delays inherent in ordinary buying and selling.

IIRC Paris is attempting to combat this with a surtax on dwellings unoccupied for long periods.

"Boomers don't like immigrants/workers, therefore life is getting really expensive" mischaracterises my argument. In hindsight I should have left out superfluous phrases.

The fully elaborated argument is long and somewhat nuanced. If you want a soundbite, how's this: "Boomers own all the stuff (to a first approximation). Two other things: first, due to their wealth they can outbid Zoomers for real estate as it comes onto the market. (Having someone live in the proprty is entirely optional.) Second, boomers are adept at protecting their wealth by keeping real estate scarce and taxes on real estate negligible, as they have always been."

Or: people are not competing for houses, piles of money are. The bigger piles are winning.

Edit to add: Demographics comes into it because the Boomers are the first generation in history to be so economically significant in their old age.

Before the boomers, life expectancy was about the same as retirement age, or younger. Houses passed on to the next generation much sooner in their life cycle, often as they were just starting to have children of their own. Now, children can themselves be retired before parents die and leave them the house. Often, perhaps usually, are, these days.

The market weakness of new-household-forming adults (the 18-49 age group) is one consequence.

We are in uncharted territory, demographically, this century.

Isn't it weird that we allow home/land ownership to a family/individual in perpetuity and then complain about high prices and scarcity for newcomers?

Just think about it for a second, we in the west allow people to buy a piece of the Planet Earth, and hold on to it forever, virtually tax free(in Western Europe at least).

How is this nothing else but blatant feudalism? And how is it still allowed? Royal families and landlords were beheaded in the past by angry mobs over abusing this system for their personal gain.

Why don't we have taxes or a system in place to prevent this accumulation of land by those who got in the game early? Why can't we just lease land instead of allowing land ownership in perpetuity? Like, "this land is leased to you/your family for the next 100 years, after that it goes on to the market again where your offspring will have the chance to lease it again if they wish at the future market rate". Something like that, as our current system is basically a zero sum game which just encourages land hoarding through inheritance.

Those who's families go cheap land for peanuts ~100 years ago, are now leveraged to acquire even more of it while those born now without family wealth have no leverage to buy anything. Insane!

Imagine you have to start paying Monopoly from square one, while others get to continue where their parents left off. How is this fair? Why don't we have a system that resets this real-estate monopoly board every generation or so?

With our current ways, instead of creating a system that rewards individuals through hard work and innovation that contribute to society and human-kind, we're creating a system that encourages asset hoarding and rent-seeking that contribute nothing to humanity, rapidly going back to feudalism, where a few landlords, both corporate and private, will own all of the available land, and most of the people will be serfs for life, without the chance of ever owning anything, no matter how hard they work.

So, again, why do we allow people to own pieces of Planet Earth in perpetuity, virtually tax free?

>How is this nothing else but blatant feudalism? And how is it still allowed

Because the moment anyone mentions this, they get bombarded with "think of the poor old people who sit on a big house! They worked hard for it!"

We as a society have a tendency to prefer leaving lucky people as is while the remainder fights for the scraps. Why this is, no clue. Beyond voting being in favor of those already owning homes (too fractured to oppose grandfathering politically), I come across this attitude among the young way too often. It doesn't take a genius to realize sharing less with more will cause people to go hungry eventually.

Those same young people are all pro-grandfathering until they realize the bottleneck bites their life goals at age 30 and beyond. By then its too late, many of them stop caring as they become part of homeowners, and the cycle continues.

> we in the west allow people to buy a piece of the Planet Earth, and hold on to it forever, virtually tax free(in Western Europe at least)

What do you mean tax free? There are inheritance taxes for that, which often go up to 50-60% of the value for higher values. That's why the majority of castles in the UK are in trusts and open to the public, paying 50% of the value of the castle and land every generation was too much.

50% inheritance taxes are very rare in Europe, for normal homeowners it's mostly negligible, and there are workarounds like donating your property to your kids before you die to avoid the inheritance process and taxes.

And the property taxes are mostly grandfathered to the price the property was last purchased at, rather than at the current market prices.

I don't know for which parts of Europe you base your knowledge on, but in France both are wrong

> like donating your property to your kids before you die to avoid the inheritance process and taxes.

Donation to family members (above a certain sum, but any property would qualify) is taxed just like any other income.

> And the property taxes are mostly grandfathered to the price the property was last purchased at, rather than at the current market prices.

Property taxes are set at the current market prices (and if the gov thinks the value is set too low, they will come back and ask for more, retroactively).

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