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Abstract
Housing is increasingly treated as a source of capital gain and rent extraction rather than a source of shelter and security for the household. This is the outcome of financialised home ownership that has led to the concentration of real estate assets by the well-off while the lower socioeconomic strata have faced unaffordable house prices and rents. As is often the case with new research agendas, the analysis has thus far focused on the most advanced capitalist countries where these trends first emerged. This article aims to expand the analysis to the peripheral countries of the European Union focusing, in particular, on Portugal. It shows that in the periphery the accumulation of assets is increasingly driven by small-scale investors from core countries that contributes to widening the gap between housing prices and rents and the living wages of the resident population, deepening wealth inequality within and across countries. In so doing, it underlines the importance of bringing core-periphery relations into the analysis of housing rentierisation.
Acknowledgements
Grateful thanks are due to João Rodrigues for comments on an earlier version of this article, to Pedro Faria and Nuno Serra for bringing to my attention some of the data used, as well as to the three anonymous referees for the very helpful comments that helped improve the article. I would also like to thank Raquel Ribeiro and the research team of the HOU$ING project for comments received during the presentations of the various versions of this article. All remaining errors or omissions are my own responsibility.
Disclosure statement
No potential conflict of interest was reported by the author.
Notes
1 In the 2021 wave, HFCS included 19 Eurozone countries: Austria (AT), Belgium (BE), Cyprus (CY), Estonia (EE), Finland (FI), France (FR), Germany (DE), Greece (GR), Ireland (IE), Italy (IT), Latvia (LV), Lithuania (LT), Luxembourg (LU), Malta (MT), Netherlands (NL), Portugal (PT), Slovenia (Sl), Slovakia (SK) and Spain (ES), and three non-eurozone countries (at the time): Croatia (HR), Hungary (HU), and the Czech Republic (CZ).
2 Real assets include valuables, vehicles, household main residence, other real estate property and self-employment businesses of household members. Financial assets comprise, among others, deposits, mutual funds, bonds, investments held in non-self-employment private businesses, publicly traded shares, managed investment accounts, money owed to households as private loans, private pension plans and whole life insurance policies.
3 The conditional median is the median asset value for households holding that asset.
4 HMR is the place where the household lives. OREP comprises: a house or flat; apartment building; industrial building/warehouse; building plot/estate, field, garden, forest, and arable land; garage; shop; office; hotel; farm, and other unspecified.
5 For example, Luxembourg has 40 immigrants per 1000 inhabitants, for a EU average of 12 (data retrieved from https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Migration_and_migrant_population_statistics, on 20 August, 2023). A country specific question on the location of OREP introduced in the Luxembourg 2010 survey showed that 65% of OREP was located in Luxembourg, 10% in Portugal, 7% in France, 4% in Belgium and 3% in Germany (Ziegelmeyer, Citation2015, p. 11). Unfortunately, similar data is not available for other countries.
6 For comparability purposes, in the figures presented below, countries from North and Central Europe are represented in black, Eastern European countries by the lighter grey, and countries from Southern Europe (including Cyprus and Malta) are represented by the darker grey.
7 Given the greater size of the informal economy in these countries, short-term rentals during holiday seasons may be underestimated. Nonetheless, the main conclusions should remain, given the wide disparity between EE&SE and NE&CE. See https://www.worldeconomics.com/Informal-Economy/(Last consulted on 30 August, 2023).
8 Data on OREP and rental income in not yet available for 2021, which is published by the Oesterreichische Nationalbank and the European Central Bank (ECB), at: https://oenb.shinyapps.io/HFCS_Keyfigures/(Last consulted on 7 September, 2023). The 2017 HFCS wave includes Poland and excludes Czech Republic.
9 It should be noted that OREP includes a variety of properties (see endnote iv), but publicly available data do not discriminate them. However, extant analysis of OREP indicate that the majority is constituted by houses or flats and apartment builds (Ziegelmeyer, Citation2015). Wind et al. (Citation2020) analysis of Secondary Property Ownership (SPO), that comprise residential buildings, shows that, in 2014, in DE 15% of households owned SPO and 80% of these received rental income (these values were 20% and 68% for OREP), in Portugal these figures were 18% and 30% (30% and 20% for OREP), which indicates that SPO is more likely to be used for rental than other property. Hence, the data of OREP provides an underestimated proxy of housing used for rental.
10 I thank an anonymous referee of this paper for pointing this out.
11 The columns depicting the percentage of tenants in the private rental market from NE and CE are coloured in black, from EE in light grey and from SE in darker grey.
12 In addition to rental income, household income includes employee income, self-employment income, income from pensions, regular social transfers, regular private transfers, interest and dividends received from publicly traded companies, interest from financial assets, income from private business and partnerships and other non-specified sources of income.
13 Greece was the first country to ask for financial assistance from the international institutions, in May 2010 (€80 billion from the EU and €30 billion from the IMF). Portugal did so one year later, in May 2011 (€52 billion from the EU and €26 billion from the IMF), followed by Spain in 2012, but only targeted at the financial sector (€100 billion from the EU). In the same year, Greece received extra financial assistance (€142 billion from the EU and €12 billion from the IMF). Italy has never made such a request, but has been severely pressured by bond markets to push for reforms and austerity measures. The contrast between SE and EE is patent in the smaller number of countries impacted and the amounts of official financing granted. In 2008, Hungary (€6.5 billion to the EU and €13.5 billion to the IMF and the World Bank) and Latvia (€3.1 billion to the EU and €4.4 billion to the IMF and the World Bank, EBRD and bilateral loans) requested financial assistance. In 2009, it was the turn of Romania (€5 billion from the EU and €15 billion from the IMF, the World Bank, EIB and EBRD in loans).
14 Foreign direct investment is distinct from the purchase of property by a non-resident; it entails active and long-term participation in the economy through a significant degree of influence over a resident corporation.
15 Cf. https://www.publico.pt/2023/08/29/economia/noticia/quase-investimento-directo-estrangeiro-semestre-imobiliario-2061552 (Last consulted on 30 August, 2023).
16 Cf. https://www.sef.pt/pt/Documents/JUL_2023_ARI_CUMULATIVO%20(1).pdf (Last consulted on 27 August, 2023).
17 Cf. https://www.acm.gov.pt/documents/10181/753067/IRS_RNH_EN.pdf/3b639655-6f18-4f94-86c2-d3b080bd691d (Last consulted on 30 August, 2023).
18 See endnote xvii.
19 Cf. https://commission.europa.eu/business-economy-euro/economic-recovery/recovery-and-resilience-facility/portugals-recovery-and-resilience-plan_en (Last consulted on 30 August, 2023).
20 Cf. https://www.theportugalnews.com/news/2022-04-11/record-year-for-foreign-investment/66333 (Last consulted on 30 August, 2023).
21 Cf. https://issuu.com/bhhsevents/docs/bhhs_realestatereport_2023_final_issuu (Last consulted on 30 August, 2023).
22 Cf. https://www.internations.org/expat-insider/2023/portugal-40373 (Last consulted on 30 August, 2023).
23 Cf. https://www.pwc.com/gx/en/asset-management/emerging-trends-real-estate/assets/Emerging%20Trends%20in%20Real%20Estate%20Europe%202023%20Report.pdf (Last consulted on 30 August, 2023).
24 Cf. https://www.cia-landlords.co.uk/news/the-cost-of-living-crisis/, https://jacobin.com/2022/09/lisbon-portugal-rents-speculation-airbnb (Last consulted on 30 August, 2023).
25 See endnote xxi.
26 See endnote xxiii.
27 See endnote xxiii.
28 Note that Slovenia joined EA in 2007, Cyprus and Malta in 2008, Slovakia in 2009, Estonia in 2011, Latvia in 2014, Lithuania in 2015 and Croatia in 2023.
29 See for Finland: https://www.vero.fi/en/individuals/tax-cards-and-tax-returns/tax_card/pension/finnish_pension_received_overseas/finnish-pension-income-received-in-portugal/and, and Sweden https://newsbeezer.com/portugaleng/swedish-parliament-approves-termination-of-tax-agreement-with-portugal-observer/(Last consulted on 30 August, 2023).
30 Just a personal note to say that it was in the process of gathering information on real estate that I became familiar with this new acronym in the website https://www.pwc.pt/pt/servicos/fiscalidade/individuals-taxation/non-habitual-tax-residents.html (Last consulted on 8 September, 2023). I presume that this is also illustrative of the process of housing rentierisation in Portugal.
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Ana Cordeiro Santos
Ana Cordeiro Santos is a researcher at the Centre for Social Studies at the University of Coimbra, Portugal. Her research interests include the topics of peripheral financialisation, housing and inequalities. She is the author of various national and international scientific publications on these topics.