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

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  • Diogo Ribeiro
  • Hugo de Almeida Vilares
  • Luís Carvalho

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.

Suggested Citation

  • Diogo Ribeiro & Hugo de Almeida Vilares & Luís Carvalho, 2025. "Can more housing supply improve affordability? A subnational perspective from Portugal," Regional Studies, Taylor & Francis Journals, vol. 59(1), pages 2582638-258, December.
    • Handle: RePEc:taf:regstd:v:59:y:2025:i:1:p:2582638
    DOI: 10.1080/00343404.2025.2582638
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