The availability of land suitable for building affordable housing in Portugal is anticipated to increase soon, following municipal efforts to rezone rural land into urban plots. However, the new land law, while aiming to regulate housing prices, does not impose any caps on the cost of rural land. This has led real estate experts consulted by idealista/news to voice concerns that the rezoning of rural land to urban could trigger a surge in land prices, undermining the goal of expanding the supply of affordable housing in Portugal’s residential market.
This amendment to the land law, developed by Montenegro’s government as part of its “Construir Portugal” program, is designed to increase the availability of land for sale nationwide. It grants municipalities the authority to reclassify rural land as urban, provided that such land is predominantly used for constructing housing that is affordable for the middle class. “The lack of available land has been one of the main drivers of high housing costs,” argued Castro Almeida, the Deputy Minister for Territorial Cohesion.
Between August and October, 11,493 rural plots for sale were identified across Portugal, with the largest numbers concentrated in the municipalities of Castelo Branco (435) and Loulé (340). Conversely, rural land for sale is scarce in Lisbon (with just 14 plots available) and Porto (28 plots), according to data from idealista/data.
How Much Could the Supply of Rural Land Increase Under the New Law?
João Braz, Head of idealista/data in Portugal, believes it is still “too early to gauge the real impact of this measure on the supply and demand for rural land.” The decision regarding which plots will be reclassified rests with municipal authorities, who will apply their specific land-use planning criteria. Property owners themselves cannot directly initiate the rezoning process but can only submit expressions of interest to that effect.
Prices of Rural Land Likely to Rise Post-Rezoning
Currently, rural land prices in Portugal vary significantly based on location and available supply. For instance, in Lisbon, the median price of rural land is €1,500/m², while in Almodôvar and Mértola (Beja), it is as low as €0.70/m²—the lowest in the country.
But how will rural land prices evolve after being rezoned as urban, thereby enabling affordable housing development? Demétrio Alves, a researcher in Urban Planning and Land Use at Instituto Superior Técnico, has no doubts: “The price of land will immediately rise,” he said in an interview with CNN Portugal. He further expressed concern that the new land law might “disrupt territorial planning and encourage real estate speculation.”
Real estate experts interviewed by idealista/news concur that the new land law is likely to drive up the value of rural land once rezoned as urban by municipal authorities. “The reclassification of land will undoubtedly have a significant impact on the value of these assets,” predicts João Braz.
IN: Idealista
