To buy or to rent? : that is the question! : Portuguese Real Estate market on trial

Abstract

The decision of buying a house is not done in an unexpected way. The subprime crisis in the US, the European bank crisis and the third Portuguese rescue from the Troika have caused so changes in the housing and rental market in Portugal, changes which we have explored in this study. This research is based on a framework developed by Tabner (2008) in order to analyse different housing owners/investors profiles, in our case, the fully funded profile and the partially funded profile, not less important, we also analysed some qualitative approaches of owning a house, as advantages and disadvantages of the housing market and the renting market, as well, two specific cases that are linked with the housing and renting market, Airbnb and Modular construction. For the period in study, from 2000 until 2013, a fully funded consumer with a tax rate of 35% would be the financially wiser profile if bought a house, in contrast to the partially funded profile with buy-to-let intentions that, by buying a house, with a market price of 100,000€ would yield a negative NPV of 51,500€, meaning that instead buying a house, this profile, for the period in study should rather have chosen to rent a property.