The financialization of the housing market in Porto and Lisbon (PT): CiTown Project report Lisbon and Porto (Portugal) case-studies

Abstract

Many European cities are in high demand because of what they have to offer in terms of lifestyle, culture, jobs and education. This increasing popularity has attracted international investors who seek to establish high‐end property portfolios. With urban property being a finite resource, this has led to spiraling‐up property and rental prices, causing a decrease in the offer of affordable housing stock. EUROSTAT (2016) calls this phenomenon the housing gap. The housing gap is related to the financialization of the housing market, whereby financial actors play an increasingly dominant role in buying up urban space, often characterized by a weak utility function. Moreover, the potential high profits of rental platforms such as Airbnb, have also attracted private investors, taking housing away from aspiring permanent residents. This has raised important concerns over the impact on housing affordability and the increasing inequality within cities. It is assumed that, the middle class mostly experiences the gap between demand for, and supply of, affordable housing. Furthermore, it is assumed that the financialization of the housing market and its associated changing patterns of ownership negatively affect the social fabric of a city. The aim of this study is to assess the extent to which residential housing market in Europe has been financialized over recent years, the consequences of that financialization, and what kind of measures have been put in place to influence (curb or foster) these developments. The period under research spans from 2013-2018. Seven European cities act as Citown's city studies, with Amsterdam as the leading city lab. The present report1 concerns specifically the cases-studies located in Portugal, namely the cities of Lisbon and Porto. This report starts by covering succinctly the background and the rationale of the Citown project (Chapter 1). It then contextualizes both case studies of Lisbon and Porto (Chapter 2), followed by an analysis of the major trends and figures relating to the financialization of the housing market in the past decade (Chapter 3). Chapter 4 discusses issues of Policy implementation and debate, whilst Chapter 5 presents the conclusions of the report.