Housing cooperatives in Portugal - the end of social purposes?

In Portugal housing cooperatives (co-ops) developed greatly after the 1975 change of political regime. The economic weight of cooperatives in national GDP (2005) is about 8.8% of total business volume and housing cooperatives make up about 3.3% of this total. During the last 30 years the functioning of housing cooperatives has changed, particularly in the principal objective of providing reasonable accommodation for lower-income families and thereby improving their living conditions/quality of life .Today many housing cooperatives function as companies, which promote housing for the middle or middle-upper income but not for the lower income groups. This seems contrary to the principal objective of the cooperatives since the 1975 change in political regime. What happened? During the last thirty years many things changed. Political policy has seen a progressive retreat of state control, undermining the social objective of housing co-ops, creating financial problems, disappearance of incentives, diminished availability of lands for construction and speculation in the housing sector. Housing co-ops are functioning in a market that has many failures. Asymmetric information, prices, unique characteristics of housing and competitiveness in the market are some of the many problems that exist in this sector. Public policy also influences these characteristics. We demonstrate in this paper that during the thirty years of existence of housing co-ops in Portugal the social objective to promote houses for low-income individuals has changed considerably and the target resident the houses has also changed. This leads us to question if the social objective of housing co-ops is being achieved. We used a questionnaire to discover why people look for cooperative housing, what the advantage of cooperative housing is and what the members’ income level is.