In recent years, Portugal’s housing crisis has evolved from a distant, abstract issue to something urgent and deeply personal.
Once dismissed as a problem for Lisbon or Porto alone, the lack of housing now touches people in nearly every part of the country.
Rents have skyrocketed, homes are being bought before they’re even finished, and many young adults — despite stable jobs — are moving back in with their parents. The question that echoes across dinner tables and WhatsApp chats is simple: Why aren’t more houses being built?
To gain a deeper understanding, I spoke with someone who works directly in the field — a civil engineer with years of experience in both urban and residential construction based in the city of Coimbra.
His answers painted a picture far more complex than many headlines suggest.
“The reason why more houses aren’t being built in Portugal is not easy to explain,” he begins. “A number of factors created the urgent need to build now.”
According to him, this urgency is the result of decisions — and, in some cases, inaction — that go back decades.
He attributes part of the problem to the construction boom of the late 1990s and early 2000s, a period of intense activity largely fueled by European Union funds. Portugal built rapidly — perhaps too rapidly. Eventually, there were more houses than buyers, and demand couldn’t keep up.
“This led to an oversupply in the market. Eventually, construction had to be scaled back, and many skilled workers emigrated to find jobs.”
Then came the 2008 financial crisis, which didn’t just affect banking and finance. Construction was hit hard.
New projects dried up, and even more qualified workers — bricklayers, site managers, surveyors — left the country. In some cases, entire teams moved abroad for better wages and more consistent work.
“We went from around 12,000 monthly housing permits in the early 2000s to an average of 1,100 between 2010 and 2017,” he says.
Those numbers are staggering. And they explain part of today’s situation: for nearly a decade, Portugal simply didn’t build enough.
Now, as demand grows again — fueled by both locals and international buyers — the country is scrambling to catch up.
But it doesn’t have the resources to do so.
“The number of construction companies and skilled workers today simply isn’t enough to make up for the housing we didn’t build in the past.”
That might sound like a call to train more workers — and it is — but even if the country were to double its workforce overnight, another bottleneck would remain: bureaucracy.
“Portugal is one of the EU countries with the most regulations and decrees to follow,” he explains. “And it doesn’t distinguish, for example, between social housing and luxury housing.”
This, he says, is one of the most significant issues. Whether you’re building a high-end apartment complex for wealthy foreigners or basic housing for low-income families, the legal and administrative hurdles are the same.
That includes safety inspections, environmental reviews, and architectural standards — all crucial in themselves but rarely scaled in proportion to the project’s nature.
“It’s something I’d change so that those with fewer means can still live with dignity.”
The rules are not only complex, but they are also constantly changing. Local councils are often overwhelmed.
“With the amount of bureaucracy and constantly changing laws, local councils need more time to review each application,” he says.
And unlike other sectors, municipal building departments haven’t grown in size, despite the increase in applications.
“There hasn’t been an increase in the number of technicians available to evaluate projects,” he states.
This means long delays.
It can take many months — sometimes more than a year — for a housing project to be approved. These delays drive up costs and discourage small- and medium-sized developers who can’t afford to wait that long. It also makes it harder for those who need homes the most to build.
And that brings us to cost.
Even when a project is finally approved, the price of the building has shot up.
“The rise in the price of materials and labor has a direct impact on construction costs.”
Portugal’s construction sector is not immune to global inflation. Since the pandemic, the cost of basic materials — cement, steel, insulation, glass — has surged. Labour, too, is more expensive, especially as competition for skilled workers intensifies across Europe.
But there’s another layer to the cost crisis — one that’s more controversial.
“There’s price inflation driven by both developers and real estate agencies, who take advantage of the housing shortage to increase their margins.”
This kind of speculative inflation — where prices are raised simply because people are desperate and willing to pay more — adds fuel to the fire.
Developers, knowing there are few alternatives, push prices up. So do real estate agencies, which collect commissions based on final sale prices.
The result?
Even modest homes are becoming unaffordable for the average Portuguese family.
And then there’s foreign investment — a topic that stirs heated debate in urban planning and political circles.
“It’s having some impact since the increased demand from people with greater purchasing power is driving up prices — both in the luxury market and in regular housing.”
While some defend foreign investment as necessary for economic growth, others argue that it is making housing increasingly out of reach. In cities like Lisbon and Porto, and even in places like Braga, Setúbal, or Coimbra, properties are bought as soon as they hit the market — often by non-residents who never plan to live there.
“From what I’ve seen in Coimbra, there are more and more foreigners investing in the mid-to-high-end segment, pushing apartment prices up across the board.”
And not all of them are buying homes to live in. Many are speculating — buying early and selling later at a profit.
“In some developments, up to 50% of buyers are foreigners,” he noted.
“We’re also seeing more and more investors buying properties while they’re still under construction, then selling them once complete.”
According to him, “From the projects I’ve followed, some investors are making returns of around 30%.”
This practice contributes to a vicious cycle: the more profitable speculation becomes, the more homes are bought for profit — not for people to live in. That further reduces supply, increases prices, and feeds the very crisis it profits from.
So, what’s the solution?
There’s no silver bullet, the engineer admits.
But there are clear steps that could help. Public policy, first and foremost, needs to catch up to the scale of the problem.
The permitting process must be both faster and fairer — differentiating between luxury and social housing.
Construction companies need incentives to train and retain skilled workers. And there should be tighter regulations on speculative investment that inflates the market without contributing to real housing stock.
When asked what he would change if he could only change one thing, he doesn’t hesitate.
“We need to ensure the right conditions to build more, to build better, and to build affordably.”
That’s the bottom line.
Without a serious commitment to long-term reform — in planning, training, regulation, and investment — Portugal’s housing crisis won’t go away.
As demand continues to rise and the workforce continues to age, the situation may only worsen.
Until then, families will continue to search endlessly for homes they can afford. Young adults will continue to postpone independence. And the question will continue to be asked — again and again:
Why aren’t more houses being built?
