by Despite the fact that rents from new contracts have increased at a rate below the national average, low wages for amateurs continue to make renting a house in the council a huge challenge.
Difficulty finding a home is not limited to those looking to buy a new home. The galloping rise in interest rates and real estate prices was accompanied by a steep rise in rent prices in the country’s largest cities.
According to the latest figures from Confidencial Imobiliário, between 2019 and 2022 the price per square meter of new leases increased, on average, by 35% in Portugal. In the last year alone the value of new rentals has increased by an average of 20%. It means that if in 2021 a property with 100 square meters was rented for 990 euros, last year the price rose to 1,190 euros.
Among the most populous municipalities, Barcelos was the one with the biggest increase in rental prices between 2021 and 2022, with new rents soaring by 39%. However, it is far from being the municipality where it is more difficult to rent a house, because the difference between the salaries of its residents and the price of rents in the municipality of Minho is not the highest. This “prize” belongs to Amadora for at least five years.
According to ECO’s calculations, the rent for a 100 square meter house in Amadora is equivalent to 68% of the average monthly net income of a household living in the municipality (around 1,431 euros). As of 2019, the effort rate of amateur families is over 60% for situations with these characteristics. In no other municipality is there such a huge squeeze on the income of families looking for a home in their municipality’s rental market, both today and over the past five years.
This is due not only to the rise in rental prices, which shot up by 13% in the last year alone (and was even below the national average), but to a very weak update of just 2.3% in wages between 2021 and 2022 .
Not far from the difficulty that the people of Amadora have in finding a house to rent in their municipality are the people of Cascais. According to ECO’s calculations, the average effort required by a family residing in Cascais to rent a 100 square meter house is 67%. In 2018 it did not exceed 55%.
Also in Cascais, the price of rents increased at a much faster rate than wages: on average, rents increased 4.3 times more than the wages of Cascais residents between 2018 and 2022.
At a lower level, there are the municipalities of Lisbon, Loures, Odivelas and Sintra, which require effort rates between 60% and 63% for families who want to rent a 100 square meter house in their municipalities and earn an income equivalent to their average inhabitants.
The difference in the rate of increase in rental prices compared to the increase in resident wages is not a dynamic exclusive to Amadora or Cascais. It is a transversal dynamic for all municipalities. Currently, only Viseu can offer its residents an effort rate close to 33% to rent a 100 square meter property.
The solution lies in renting smaller houses
To overcome the financial pressure caused by rising rents in recent years, families who also face difficulties accessing mortgages, have only one solution: to look for smaller houses.
Taking as a principle that house rent expenses should not exceed a third of the household income (consensually considered by the banking sector as a marginal percentage of financial health), it is necessary to make an effort to find the “ideal house”.
In Amadora, for example, a family with an income equivalent to the municipal average can only rent an apartment, with an effort rate of less than 33% if they find a house with less than 50 square meters. This means that you pay an average rent of 565 euros, according to data from Confidencial Imobiliário.
In Porto, to achieve this financial balance ratio, families must settle on an area of 60.5 square meters and in Lisbon, properties that meet the requirements cannot exceed 52.5 square meters.
In the opposite corner is Viseu, where despite the fact that rental prices increased by 54% between 2018 and 2022 (the municipality with the highest increase during this period), families manage to rent properties of around 100 square meters without having to incur greater financial costs. effort.one third of their income.
This is because both the price per square meter of properties rented last year in Viseu was 47% lower than the average price of the national average, and the income of Viseu households is 7% above the national average.
Maximum area of leased property with an effort rate of 33%.
Taking into account the current prices applied in the rental market and the financial conditions of families, only in Viseu it is possible to rent a house with about 100 square meters, which does not exceed the effort rate of 33%.
ECO, Confidencial Imobiliário and INE. • The area of the residence (in square meters) is calculated based on the 33% effort rate, taking into account the average income of the residents of the respective municipalities.
