Planned investment under the government’s ‘Construir Portugal’ housing programme will fall by almost two-thirds next year as European recovery funding ends — against a backdrop of protests over housing shortages and unaffordable rents.
The draft State Budget for 2027 (to start being discussed in parliament tomorrow) envisages €1.061 billion for the programme, down from €2.905 billion this year: a reduction of €1.844 billion, or 63.5%.
The sharpest fall affects support for access to housing, where the allocation drops by 80.9%, from €2.216 billion to €424 million.
The national fund for emergency and temporary accommodation, allocated €139 million this year, has no funding earmarked for 2027. Funding for refurbishment of the housing stock also falls, from €22 million to €10 million.
There is, however, an increase in the allocation for public affordable housing under urban regeneration and expansion. This rises from €463 million to €612 million — an additional €149 million that falls well short of offsetting reductions elsewhere.
Presented by prime minister Luís Montenegro in May 2024, ‘Construir Portugal’ carried an announced investment of around €7.5 billion by the end of the parliamentary term.
According to Jornal de Notícias, the planned reduction follows a more than fourfold increase in investment under the programme in 2026.
The government describes the fall as a transition away from the exceptional funding provided through the Plan for Recovery and Resilience (PRR). Its budget report points to European structural funds, particularly Portugal 2030, alongside national funding and private capital, to sustain investment.
What the report does not establish is how much of the reduction reflects completed projects, the loss of PRR funding or changes to construction schedules. The headline figures therefore do not, on their own, show which projects could be affected.
Finance minister Joaquim Miranda Sarmento maintains that funding for housing policy is secured. Speaking at a parliamentary hearing recently, he reiterated the target of building 59,000 social homes by the end of the decade.
He has also highlighted faster implementation of Portugal 2030 and the mobilisation of national funds as ways to maintain investment once PRR funding ends.
A separate €2 billion housing budget
Alongside figures for ‘Construir Portugal’, the draft Budget allocates €2.003 billion to the broader Housing budgetary programme — roughly €1.39 in every €100 of projected public expenditure.
These are separate budgetary instruments, and their allocations cannot simply be added together.
Of the broader Housing allocation, €1.071 billion is earmarked for promoting housing supply and regeneration, €917 million for access to housing and rental support, and €15 million for urban management and the quality of the built environment.
The rental support allocation covers schemes including Porta 65 Jovem, Porta 65+ and PAER, alongside investment contracts for rental properties and tax incentives for affordable renting.
Nor can the entire allocation for housing supply be treated as money for building new homes: it encompasses several types of measures. Public expenditure also includes the cost of housing-related tax benefits.
Councils face investment squeeze
The post-PRR slowdown also extends to local authorities. Overall municipal investment — across all areas, rather than housing alone — is projected to fall by 29.4%, or around €1.45 billion, to €3.47 billion.
To help councils carry out housing projects, the government is considering excluding certain loans from the calculation of municipal debt limits.
This would give local authorities more room to borrow. They would still have to repay loans, however.
Source material: Jornal de Notícias/ ZAP