At the beginning of the 1980s, less than 60% of families owned their main residence and almost 40% lived in rented houses, reveals the Bank of Portugal in the October Economic Bulletin published this Wednesday.

During the following two decades, there was an increase in the number of families owning their own home, which culminated in a record figure in 2001, with around 76% of households owning their own home.

“The country's economic growth contributed to this movement, which was transmitted to family income, greater access to credit, as a result of the liberalisation of financial markets and integration into the European Union, as well as the existence of a highly regulated and unattractive for landlords”, explains Banco de Portugal and reported by ECO.

This evolution has meant that the average age for purchasing a home has reduced over the last few years and caused an increase in the percentage of families with loan burdens associated with housing. However, Banco de Portugal notes that this trend has reversed in the last two decades: between 2001 and 2021, the percentage of homeowners went from 76% to 70%.

“Given the preference of families for purchasing a home at a young age and the maintenance of this occupation regime throughout their lives, this reduction mainly reflects a marked recomposition of the property regime among young people in more recent generations”, reads the Bulletin Economic.

Banco de Portugal highlights that “the reduction in the percentage of owners after 2001 was concentrated in families where the representative is under 65 years old and, in particular, in those under 35 years old.”

Fewer young owners

The data made available by the regulator shows a sharp drop in the percentage of young homeowners in the last two decades: if, in 2001, 70% of families were homeowners at the age of 25/34 (born in the 1967-1976 generation), in 2021, the homeownership rate among those aged 25 to 34 (born in the 1987-1996 generation) dropped to 40%.

Furthermore, “the percentage of owners under 25 years old fell to less than 35% in generations born after 1986”, which compares with values between 45% and 55% in generations born in the previous three decades.

This dynamic happened because “younger families were particularly affected by the increase in the unemployment rate in the period 2000-2014, as a result of the weak economic growth of the early 2000s and the sovereign debt crisis”, explains the Bank of Portugal, highlighting that, “in families where the representative is under 35 years old, the percentage of owners in 2021 was reduced to the 1981 level.”