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In Portugal, where wages are low, the housing crisis in Europe is deep

Like a growing number of people in Portugal, Georgina Simoes no longer earns enough money to pay for a place to live.

The 57-year-old caretaker at a nursing home earns less than 800 euros ($845) a month, the same as a quarter of the country’s workforce. For the past decade, she’s gotten by because she’s paid just 300 euros a month to rent her one-bedroom apartment in a mediocre Lisbon neighborhood.

Now, with rents skyrocketing in the capital, her landlord is evicting her. She says that she is not going to give in because finding another place close to work will be too expensive.

“You live in this state of anxiety,” he says in his apartment with a partial view of the Tagus River. “Every day you wake up thinking: ‘Do I stay here or do I have to go?’

Simoes and many others, increasingly including members of the middle class, are being squeezed out of Portugal’s real estate market by rising rents, rising home prices and rising mortgage rates, driven by ​by factors including the growing influx of foreign investors and tourists looking for short-term rentals. . The deepening of fears in recent days about the health of financial institutions, as well as the prospect that inflation will continue to be high, have added more uncertainty.

Portugal’s center-left Socialist government last month unveiled a package of measures to tackle the problem.

Between 2020 and 2021, house prices in Portugal skyrocketed by 157%. From 2015 to 2021, rents increased by 112%, according to the European Union statistics agency, Eurostat.

But the rising cost of real estate only tells part of the story.

Portugal is one of the poorest countries in Western Europe and has long sought investment thanks to a low-wage economy. Just over half of Portuguese workers earned less than 1,000 euros ($1,054) a month last year, according to Labor Ministry statistics.

Across the EU, the recent rise in inflation, especially rising food and energy prices, and the lingering economic and employment consequences of the COVID-19 pandemic have exacerbated the bloc’s housing dilemma. 27 nations.

More than 82 million households in the EU have difficulties paying rent, 17% of people live in overcrowded accommodation and more than 10% spend at least 40% of their income on rent, the bloc says.

Those most affected by unequal access to decent and affordable housing are young people, families with children, the elderly, people with disabilities and immigrants.

In Portugal, the problem has been magnified by tourism, whose strong growth before the pandemic has returned with a vengeance, as well as an influx of foreign investors who found Lisbon property prices relatively low and have been raising prices forcing the local people to leave. of their neighborhoods.

Portugal attracted a record 25 million foreign tourists in 2019. After a sharp, pandemic-induced drop, the number rebounded to 15.3 million visitors in 2022, an increase of 158% over the previous year. Analysts expect a 33% increase this year.

For some people, that long-awaited national success with foreign vacationers is a matter of being careful what you wish for.

Rosa Santos, 59, who was born and raised near Lisbon’s 14th-century São Jorge Castle overlooking the port city, says most of the houses in her neighborhood have been converted into short-term vacation rentals. , mostly for foreign tourists. It is common to see and hear visitors dragging suitcases across the cobblestones.

The rich traditions of the locals are gone, and now there isn’t even a bakery or grocery store there, Santos says.

“It’s not a neighborhood anymore,” he said. “This is not a city, it is an amusement park.”

Activists are fighting the trend that is stealing the charm of the capital. Santos is part of a growing movement calling for a referendum to stop short-term vacation rentals in Lisbon. They meet every weekend in one of the city’s neighborhoods to collect signatures in support of their goal. They need at least 5,000 signatures to start the referendum process at City Hall.

On a recent rainy day, police helped municipal workers bulldoze several illegal makeshift homes on the outskirts of Lisbon that have no electricity or running water. Families forced by necessity to live in them begged to stop.

The shacks were just a few kilometers from luxury condominiums being built on Lisbon’s waterfront, where a four-bedroom apartment is selling for 2.4 million euros.

Not far away, in the low-income Camarate neighborhood near the Lisbon airport, missionary worker José Manuel helps families in need, some of whom cannot afford a room, let alone a house, and are consequently being expelled from the city. city.

“We are already talking about a room in Camarate for 400 euros (per month), a house for 600 or 700 euros,” he said. “Those who have minimum wage cannot afford a house.”

Grassroots housing rights groups have sprung up and are helping people struggling to keep a roof over their heads. One of them, Habita, is pressing the authorities to stop encouraging premium developments that are being built by and for wealthy foreigners.

For Rita Silva of Habita, the government must also introduce stricter rent controls and “stop evictions if there are no adequate housing alternatives.”

Prime Minister Antonio Costa says that cities that lose their inhabitants lose their “authenticity” and become “a Disneyland” for tourists.

Among the measures that his government hopes will cause a market correction:

—Force the owners of vacant properties to rent them, giving priority to tenants under 35 years of age, single-parent families or families whose income has decreased by more than 20%.

—Limit increases in new rental contracts to 2% above the previous contract.

—End the government’s “golden visa” program, which grants residency permits to wealthy foreign investors buying property in Portugal.

—Stop new licences, except in rural areas, for short-term vacation rentals through tourist accommodation platforms.

—Change commercial property to residential use.

The proposals have sparked controversy: some see them as clumsy and misguided. Others say they are missing details about how they will work. And some are angry.

Hugo Ferreira Santos of the Portuguese Association. of Real Estate Developers and Investors said foreign investment has halted as people wait to see how the golden visa changes shape up.

“What I have been hearing from international investors is that Portugal is not a credible country,” he said. “It is a country that changes the rules of the game halfway and a country where foreign investment is not welcome.”

Small investors in short-term vacation rental apartments are also hurt.

“There are people who gave up their lives, set up their own businesses, created jobs, have workers and suddenly one day they are knocked down with no prospects,” said Eduardo Miranda, president of a Portuguese association that represents their interests.

Some measures will require parliamentary approval, and others could be sent to the Constitutional Court for approval.