Real estate in some countries is overvalued, analysts say. In Portugal, for example, prices are inflated by about 35%. Why? One of the main reasons for this is the development of short-term rentals.
The growth of short-term rental housing in tourist areas is closely related to rising housing prices and rents, the researchers concluded.Major cities in Spain, such as Barcelona, are also experiencing similar problems.
Analysts also blame institutional investors, such as insurance companies and pension funds, for the sharp rise in housing prices.
Another factor is bureaucracy, which affects the entry of a sufficient number of new projects into the market.There are problems related to the issuance of building permits in Portugal, Croatia, Spain and Greece, where the number of permits is close to the historical minimum.The bureaucratic obstacles also include lengthy and complex procedures for obtaining a license. «In most EU countries, there are fixed terms for issuing licenses, which range from 3 weeks in Lithuania to 31 weeks in Portugal.
Finally, the shortage of supply is compounded by an oversupply of empty housing. Portugal is the leader in this indicator, but the problem is also observed in Bulgaria, Romania, Malta, Cyprus and Hungary.
Source: Euronews
