by RICHARD MATOUSEK
Housing costs in Lisbon are so high that it’s ranked even more unviable for renters than New York. Attempts to solve the issue through “market efficiency” have made the problem worse.
It’s Tuesday morning, and Manuela, a second-year student at the University of Lisbon (ULisboa), wakes up on her friends’ floor in the city center, gets ready, and walks to class. But she’s not crashing after a night out: she tells me she’s “been living on the floor Monday-Friday after nearly two months of searching for a room.”
Manuela’s story is not unique. Leston, a Portuguese-Angolan resident, told me that his cousin “struggled to move to Lisbon from South Africa after being asked to provide three months’ rent upfront.”
To rent a flat, geographer Agustín Cocola-Gant tells me, residents of the city — known as Lisboetas — “have to dedicate 50-60 percent of their salary to rent if they have a well-paid job. If you earn the minimum wage, you can forget about renting.”
This March, Lisbon ranked the world’s third-least viable city to live in, based on local wages and rents. Its housing market seems far more stressed than larger cities’, such as Paris and New York.
Although prices have risen, the population has fallen. In the 1980s, the neighborhood of Alfama had 20,000 residents. Today it houses one thousand. Elderly residents have been forced out of districts they’ve spent their whole lives in. This exodus “prevents us from establishing communal neighborhood life,” says Ana Gago, a ULisboa researcher who conducted qualitative research in Alfama. “And that, I think, is violent.”
Less than fifty years ago, Lisbon revolted against a right-wing dictatorship and chose people power in its Carnation Revolution. Then, the Right and conservativism were so unpalatable that the new major parties called themselves the Social Democrats (center-right) and Socialists (center to center-left). So how did Lisbon get from that to a situation where it squeezes its people so harshly?
Boom and Squeeze
According to Luís Mendes, a geographer at ULisboa and housing consultant at the local council, Lisboetas were hit by a perfect storm of poor policies.
After democratizing and decolonializing, Portugal came into the mid-1970s with “a weak base for developing,” explains Simone Tulumello, also a ULisboa geographer. He argues that subsequent governments focused on development “activities with low added value, of which tourism is the golden egg.”
Portuguese tourism boomed even into the Great Recession, when the European Central Bank and International Monetary Fund bailed Portugal out of its debt on the condition it implement austerity measures and deregulation for investment. Portugal ran with this, developing the visto gold (Golden Visa), which granted European Union residency to investors who paid in, such as by buying property worth €500,000, and a nonpermanent resident program incentivizing European property investors. Both proved popular.
It also intensified its focus on tourism to regrow incoming investment and jobs. Although this still had low fixed costs, the jobs created were often low paying.
Locally, City Hall attempted to renovate Lisbon’s decaying buildings by promoting further investment and entering the global housing market. Sales tax was cut on renovations, from 21 to 5 percent. “This,” explains Mendes, “is when this neoliberal turn began to flourish.”
Lisbon trumpeted its many merits, adorning the covers of several magazines and topping several rankings. It became the it-girl city for tourists, digital nomads, and start-ups. Madonna and Michael Fassbender moved in.
Local property owners and foreign investors took notice.
“With the boom of Lisbon and the change in its self-perception,” says Tulumello, “people clicked that: ‘OK, now rent is about making lots of money.’”
Several landlords used a new national rental law that facilitated evictions and converted their properties into lucrative holiday rentals, mainly through Airbnb.
As Lisbon became more desirable, prices rose, and speculators arrived.
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