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

Ribeiro, Diogo, de Almeida Vilares, Hugo and Carvalho, Luís (2025) Can more housing supply improve affordability? A subnational perspective from Portugal. Regional Studies, 59 (1). ISSN 0034-3404

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Abstract

We investigate the impact of housing supply on affordability in rapidly appreciating sub-national 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 skepticism” debate.

Item Type:	Article
Additional Information:	© 2025 The Author(s)
Divisions:	LSE
Subjects:	H Social Sciences > HB Economic Theory J Political Science
JEL classification:	R - Urban, Rural, and Regional Economics > R2 - Household Analysis > R21 - Housing Demand R - Urban, Rural, and Regional Economics > R2 - Household Analysis > R23 - Regional Migration; Regional Labor Markets; Population R - Urban, Rural, and Regional Economics > R3 - Production Analysis and Firm Location > R31 - Housing Supply and Markets R - Urban, Rural, and Regional Economics > R3 - Production Analysis and Firm Location > R38 - Government Policies; Regulatory Policies
Date Deposited:	11 Dec 2025 06:09
Last Modified:	11 Dec 2025 12:03
URI:	http://eprints.lse.ac.uk/id/eprint/130587

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