The Portuguese Government is targeting the delivery of more than 50,000 new homes next year, following the completion of around 40,000 homes by the end of 2026, according to Infrastructure and Housing Minister Miguel Pinto Luz.
Speaking at the 10th edition of the Portugal Real Estate Summit, organised by Iberian Property and held at the Hotel Palácio Estoril on 14–15 September, Pinto Luz outlined the Government's strategy for addressing Portugal's housing shortage to an audience of more than 400 property investment professionals from around 20 nationalities.
The Minister highlighted the scale of the Government's ambition by comparing the current pipeline with Portugal's previous major public housing programmes. The Government is now pursuing what it considers its largest public housing investment programme in decades, with around 40,000 homes targeted for delivery by the end of 2026 and more than 50,000 in 2027.
“Today, we already have the figures to deliver,” the Minister said, pointing to a pipeline covering the next year and a half, as well as a longer-term plan for 133,000 new homes based on housing strategies developed by more than 300 municipalities across the country. The Government has also secured the financing procedures required to support that pipeline.
Pinto Luz said that 90% of the “Construir Portugal” programme is now implemented, and stressed that its measures had not been designed in isolation by the Government. Instead, the programme was developed through dialogue with investors, banks, developers, municipalities and households, with the objective of creating the conditions for the market to increase supply.
The Minister outlined a strategy operating across different time horizons. In the short term, the Government is seeking to address the immediate housing crisis through increased financial support, particularly for those most in need. Annual public funding for housing strategies has risen from around €200 million during the previous Government's 18-year tenure to more than €1 billion a year, he said.
In the medium term, the focus is on increasing housing supply, while the longer-term strategy is built around three pillars: tax incentives, licensing reform and a new residential leasing framework.
The first of these pillars is already in place. The Government's tax reform is designed to provide greater predictability for investors through long-term rental contracts of up to 25 years, alongside a 6% VAT rate and reduced IRS and corporate tax rates, potentially as low as 0% or 10% for qualifying rents below €1,600 or €2,300, respectively.
The wider fiscal package also includes measures such as exemptions from IRS, IRC, AIMI and IMI for qualifying housing sold or rented at moderate prices.
“Predictability is the main issue for investors,” Pinto Luz argued, saying that this had consistently emerged as one of the key concerns in the Government's discussions with the investment community over recent years.
The second pillar is the reform of the licensing process, which the Minister said will come into force on 1 October. The changes are intended to make the process more streamlined, remove obstacles and reduce ambiguity, while limiting the discretion municipalities have traditionally had in the licensing process.
The third pillar is the reform of residential leasing legislation. The proposed changes are currently before Parliament and are intended to clarify the rules governing existing and new contracts, rents and specific situations involving different groups of tenants.
Bringing greater clarity and predictability to investment is the common objective of all three measures, according to Pinto Luz.
When will increased supply start to translate into lower prices?
The Government is hopeful that increased supply will eventually put downward pressure on housing prices, but Pinto Luz stressed that Portugal is still dealing with a significant accumulated shortage.
“For the first time in 10 years, the Bank of Portugal has identified a situation where we have new households coming into the country and, at the same time, new construction,” he said. “More importantly, for the first time in 10 years, construction is exceeding the number of new households entering the market.”
However, the Minister argued that this improvement needs to be viewed against a substantial backlog. According to figures from the Bank of Portugal cited by Pinto Luz, Portugal has accumulated a shortfall of more than 300,000 homesover the past decade or more.
“That is the game changer that we have to implement,” he said, arguing that the priority now is to close this structural supply gap.
This will require continued action across licensing, financing, taxation, permits and land availability, with public policy aimed at creating the conditions to accelerate construction and gradually address the country's housing deficit.
Pinto Luz acknowledged that these measures will not produce an immediate change in market conditions. With housing costs continuing to rise and the supply-demand imbalance still acute, he argued that the Government must pursue measures capable of addressing both the structural shortage of homes and the immediate needs of households.
Stressing that changing the balance between supply and demand will take time, the Minister said: “We have to wait. But people can't wait – they need homes now.”
The Government is therefore combining its supply-side strategy with measures aimed at supporting households in the short term, including incentives for young people to purchase homes and support for those without sufficient income to secure bank financing.
These measures include a public guarantee for young people purchasing a home, as well as IMT and stamp duty exemptions for buyers aged up to 35.
Pinto Luz acknowledged that measures supporting demand could appear contradictory at a time when the Government is trying to increase supply. However, he argued that young people need stronger incentives to access housing and that the measures are also intended to prevent emigration.
According to figures presented by the Minister, more than 100,000 young people have purchased homes over the last year and a half, with an average transaction value of around €200,000. Pinto Luz said this indicated that the measures were reaching the middle class.
He acknowledged that this could put upward pressure on prices in a small segment of the market, but argued that it would not affect the market as a whole, particularly given the other supply-side measures being implemented simultaneously.
Licensing and financing identified as key areas for change
Asked where investors should expect the most significant changes over the next 12–24 months, Pinto Luz pointed to two areas in particular: licensing and financing.
The Minister stressed that the reforms were developed through consultation with the different stakeholders involved in the housing market, rather than being designed solely within the Government.
“This was not done in a closed cabinet at the Ministry of Infrastructure and Housing,” he said, highlighting discussions with investors, banks, developers, municipalities and those seeking homes.
According to Pinto Luz, this process has directly informed the measures now being implemented. He said the Government intends to maintain a close relationship with private investors in order to identify what may still need to be adjusted.
On licensing, the objective is to create a more predictable process, while reducing the discretion of municipalities and clarifying the responsibilities of each party.
“The licensing process is now different,” he said, adding that where a development already has an approved permit, municipalities will have less scope to intervene.
On financing, the Government is seeking to complement traditional bank lending with public-backed mechanisms. Pinto Luz pointed to public guarantees in cooperation with the European Investment Bank and financing lines for investors amounting to more than €3 billion.
He also highlighted a newly signed €1.5 billion financing line for municipalities, aimed at supporting investment at the local level.
“On the licensing side, together with financing, you will see some changes in the next year or two,” Pinto Luz said. “I hope, in the end, we will have results.”
Government sees public-private partnerships as key to expanding affordable housing
Pinto Luz said the Government sees a clear role for both public and private capital in addressing Portugal's housing shortage, with the State increasing its direct contribution to public housing while creating mechanisms to bring institutional investors and developers into segments that remain commercially viable.
“I strongly believe in the market. I'm a liberal,” he said. “But I also believe that, in regulated markets, the State needs to have a tangible role.”
That role, he argued, is being reinforced through the Government's ambition to deliver 133,000 new homes, increasing the share of publicly owned housing in Portugal.
The Minister said this is particularly important at the lowest end of the market, where the Government is targeting rents of around €400 per month through what is known in Portugal as renda apoiada.
“This is something that the market isn't looking for,” Pinto Luz said. “It is something that only the public housing system can deliver effectively.”
At the same time, he sees significant scope for public-private partnerships in the segment between fully subsidised housing and the upper end of the rental market.
The Government has therefore created a PPP framework under which the State provides the land and facilitates the licensing, while developers contribute their expertise in design, architecture and construction, with the private sector also managing the completed projects. Public guarantees can be combined with financing from the traditional banking system.
The State's real estate arm, Estamo, is already working with municipalities to put land forward under this model, according to the Minister.
The Government wants the first partnerships to be underway by the middle of 2027, with Estamo already working with municipalities to prepare the projects.
Combined with the tax incentives introduced for investors targeting rents below €2,300, and the lower thresholds applicable under the scheme, Pinto Luz argued that the framework now brings together the necessary components for private capital to participate in expanding affordable rental supply.
“We really cannot do it alone. We need the private sector.”
Pinto Luz concluded by stressing that the Government's measures should be judged over time. The licensing and tax reforms have only recently moved into implementation, while the leasing reform is still being discussed in Parliament. “It is too soon to have the results,” he said. “We have to wait.”
At the same time, his message to investors was clear: the Government believes that the main elements of the framework are now in place to give the market greater predictability, unlock new supply and attract more private capital.
“We want to attract more capital and developers to help fill these gaps in the market.”
