"There has been in Europe, in many countries, a supply-side problem, and that has to be addressed, regardless of what we are seeing on the house price front", said IMF.
The International Monetary Fund (IMF) director for Europe has advised the authorities of European countries with housing problems, such as Portugal, to “be vigilant” about risks to financial stability by proposing supply-side solutions.
“House prices have increased quite a lot in several countries over the last decade, and that happened because of low interest rates over a relatively long period and then, in several countries, we had another boost during the pandemic because people moved to remote working,” Alfred Kammer said in an interview with European news agencies, including Lusa news agency, in Stockholm.
Confronted by Lusa with the current housing problems in Portugal, he pointed out that supervisors had to watch out for “the risks to financial stability”.
“The supervisors have to be vigilant and carry out stress tests,” he suggested. Even so, the IMF director for Europe added that “it is not just a problem on the demand side”. “There has been in Europe, in many countries, a supply-side problem, and that has to be addressed, regardless of what we are seeing on the house price front,” he argued.
According to Alfred Kammer, this scenario in the housing market “has been very bad for growth because when you look at young people, they cannot move to urban centres because it is too expensive”.
“That is a wider issue outside of the current corrections we are seeing, which many European governments effectively have to address,” he concluded.
In Portugal, António Costa’s government has adopted several measures to respond to the housing crisis.
The proposed package of measures aims to increase the supply of properties used for housing purposes, simplify licensing procedures, increase the number of homes on the rental market, combat speculation and protect families.