Can more housing supply improve affordability? A subnational perspective from Portugal

Diogo Ribeiro, Hugo de Almeida Vilares and Luís Carvalho

Regional Studies, 2025, vol. 59, issue 1, 2582638

Abstract: We investigate the impact of housing supply on affordability in rapidly appreciating subnational markets in Portugal. Our spatial econometric model confirms a negative relation between housing stock and prices, yet predicts that, on average, maintaining the construction pace of the 2000s would lower prices by only 3%, while doubling it would bring a 6% reduction. We also find significant price impacts from short-term rentals and international demand. Simulations indicate that a policy mix combining moderate supply growth with sensible limitations in those domains could more effectively alleviate affordability pressures in high-demand regions, bringing spatial nuance to the ‘supply scepticism’ debate.

Date: 2025
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DOI: 10.1080/00343404.2025.2582638

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