Price of houses in Lisbon rises five times more than disposable income – The Economic Journal

The increase in house prices in Lisbon follows the trend of the main European capitals and is significantly higher than the increase in disposable income. The price of houses in the Portuguese capital rose 49.23% between 2012 and 2018, while disposable income rose 9.23%, according to a report by Moody's Investors Service, released on Thursday.

"The rate of appreciation of the price of housing in some of the major European cities has exceeded national averages between 2012 and 2018," notes the report of the rating agency, explaining that the trend began with the beginning of recovery from the recession of the crisis , "More in recent years".

"Given the rapid valuation of house prices in many major European cities, the rise in wages has been progressively lower," he says. Dublin, the Irish capital, is the city where the disparity between house prices and disposable income has sharpened – disposable income rose by 10% between 2012 and 2018, about 80 percentage points less than housing price inflation .

One of the most visible consequences of this picture is, in general, the postponement or even abandonment of plans to buy home for the first time by potential buyers, writes the rating agency. On the other hand, the demand for rent in urban areas or the purchase of houses in suburban cities increases.

Lisbon is queen of the local accommodation

Among the major European cities analyzed by Moody's, Lisbon leads the ranking of cities with the largest ratio between the number of Airbnb apartments per thousand inhabitants.

"The demand for (temporary) leasing of tourists in urban areas is boosting the real estate market," the report said. "Among the major cities, Lisbon, Paris and Amsterdam have the highest percentages of housing used by Airbnb." In the 'top 5' there are also Milan and Dublin.

Moody's explains that the construction of new housing in major cities remains relatively low, supporting real estate prices, which avoids oversupply of homes. It also highlights that new homes account for a low share of residential real estate sales in urban areas.

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