Household incomes have not risen at the same pace as house prices for some time. And the gap between the two is getting wider: in Portugal, house prices exceeded wages by 47.1 percent in the first quarter of 2022, making the country of the Organization for Economic Cooperation and Development (OECD) where this difference is greatest.

According to a report by idealista, when looking at the provisional data for the first quarter of 2022, it is clear that Portugal has the biggest gap between house prices and wages – at 47.1 percent – being in first place among the countries that make up this organisation. And it is not the only one where house prices exceed wages by more than 40 percent: in the Netherlands the difference is 46.8 percent, in the Czech Republic 46.2 percent and in Canada 43.5 percent.

There are 25 countries out of 29 with available data (out of a total of 38 OECD countries) where house prices exceed wages. But only seven states have ratios above the OECD average, which reached 126.8 in the first three months of 2022. Among them are - in addition to the Top 4 - Hungary (139.8), Germany (138.4) and the USA (136.4).

Looking at Portugal, it can be seen that the gap between the values ​​of homes for sale and household incomes has increased: it went from 138.4 registered in the first quarter of 2021 to 147.1 in the same period of 2022, reaching the maximum value registered in the last five years. The leap that Portugal's ratio made between these two points (6.3%) was higher than that of the Euro Zone (5.2%), but lower than that of the OECD (14.5%).

House prices in Portugal

House prices in Portugal have become 70 percent more expensive in the last 12 years, according to Eurostat data, showing faster growth than the European Union, since the average of the 27 Member States was 45 percent in the same period. It turns out that, although households increased their savings during the health crisis, their gross annual income did not evolve at the same pace as home values.

Wages in Portugal

The salaries of the Portuguese are rising year on year, but at a much slower pace: between 2014 and today, average gross earnings have risen year on year by between 0.5 percent and 3.6 percent. In 2021 income experienced the biggest leap in recent years, from 1,315 euros/month in 2020 to 1,362 euros/month in 2021 (+3.6 percent).

The Portuguese statistics office also says that the average total monthly gross remuneration per worker in the quarter ended in March 2022 was 1,258 euros per month, that is, a value only 2.19 percent higher than that recorded in the same period in 2021.