Where are the expensive housing rental rates in Portugal?

This paper analyzes housing rental rates at the parish level within municipalities. The analysis explores spatial patterns of housing rents in 4049 Portuguese parishes across 278 municipalities using data from the 2011 Population and Housing Census from the Portuguese National Institute for Statistics.

Housing rental rates tend to be higher in parishes with greater population density (measured by the number of citizens living per square kilometer), a higher number of dwellings, and greater potential sustainability (measured as the ratio of working-age population-between 15 and 64 years-to elderly population-aged 65 and over), better mobility (measured as resident population employed outside the territorial unit plus employed non-resident population in the territorial unit divided by employed resident population), and a higher social-diversity ratio (measured as a weighted average of each socioeconomic group), besides the dwelling’s useful area in square meters. Housing rental rates are inversely related to low living conditions, unemployment, and elderly dependency (measured as the ratio of the number of economically inactive elderly people to the number of people of working age).

Portuguese urban households seem to be willing to pay a premium not only to live in the main cities but specially to live in specific parishes within these cities. Of course, high rental rates can also signal observed quality measures that are not captured in the empirical specification studied that drive such things as population density, mobility, unemployment, and other characteristics.

To highlight one finding of the paper, policies designed to improve transportation and accessibility may increase the value of the housing rental market. However, the analysis in the paper is not designed to address the welfare consequences of such policies.

Click here to go to the paper by Sofia Vale and Felipa de Mello-Sampayo.