New Land Law Promises to Slash Housing Prices in Portugal by 20% – Here's How

Government's Assurance on New Land Law

The Portuguese Government is confident that the new land law will lead to a 20% reduction in the prices of new houses in metropolitan areas and district capitals. This initiative aims to set prices below the levels recorded in Portugal in 2024.

According to information sent to Lusa, the Ministry of Territorial Cohesion emphasizes that the new law establishes maximum prices for new homes that are lower than the average real estate transaction prices recorded in 2024. The National Statistics Institute (INE) reports that the current average price per square meter for new homes is 50% higher than that for used homes.

“Being able to purchase new homes at a maximum price that is 20% below current market prices not only prevents but also stops speculation,” states Minister Castro Almeida.

Impact of the New Law

The law, published on December 30, 2024, will enable municipalities to release rustic lands for the construction of moderately priced homes for the middle class, which is expected to have a significant anti-speculative effect on the market.

Analyzing the values of new home deeds registered in the Confidencial Imobiliário platform in 2024, the ministry notes that the average price per square meter in high-demand municipalities such as Grande Porto, Grande Lisboa, and district capitals is notably higher than the maximum limit imposed by Decree-Law 117/2024.

In cities like Lisbon and Cascais, the price difference reaches 45% and 48%, respectively. Other significant cities such as Sintra (36%), Viana do Castelo (34%), and Braga (28%) also show considerable discrepancies between the new law's limits and current market prices.

Housing and Urban Development

The government cites the latest Consumer Price Index (CPI) data, indicating that in the third quarter of 2024, the average price per square meter for new housing was 50% higher than that for used housing. All new homes built on the rustic lands transformed into construction areas will be completely new.

Minister Castro Almeida argues that the law's benefits extend beyond combating speculation, as it prevents the construction of buildings in rural areas. He assures that the conversion of rustic lands to urban use will not occur in flood-prone areas or lands designated for agriculture by the National Agricultural Reserve.

Local Autonomy and Construction Plans

To address the housing issues in the country, the minister claims that less than 1% of all available rustic lands will be required. He emphasizes that the removal of bureaucracy will not compromise transparency in municipal decision-making.

The new law allows municipalities to release lands for housing construction nationwide, provided that these lands are compatible with existing urban areas, with at least 70% of their area occupied by residential buildings.

The decision to release these lands for residential use will depend solely on municipal councils and assemblies, without needing further approval.

This measure is part of the 'Build Portugal' plan, which seeks to create construction areas on lands compatible with existing urban areas. Minister Castro Almeida states that this is an effective way to increase housing construction, ensuring prices remain accessible to the middle class without deterring investments in the real estate sector.

Controversy and Legislative Review

The announcement of the new law has sparked controversy, with the Socialist Party proposing amendments to the decree. Additionally, members of the Economy, Public Works, and Housing Commission unanimously approved a request for an urgent hearing of various stakeholders, including Minister Miguel Pinto Luz and Minister Manuel Castro Almeida.

Over 600 experts and former political leaders have criticized the measure in an open letter, while the National Association of Portuguese Municipalities acknowledges the positive vision of increasing responsibilities for municipalities but advocates for improvements.

The minister is set to be heard by the commission next Tuesday, with parliament expected to discuss the matter on the 24th.