We investigate the impact of housing supply on affordability in rapidly appreciating subnational markets in Portugal. Our spatial econometric model confirms a negative relation between housing stock and prices, yet predicts that, on average, maintaining the construction pace of the 2000s would lower prices by only 3%, while doubling it would bring a 6% reduction. We also find significant price impacts from short-term rentals and international demand. Simulations indicate that a policy mix combining moderate supply growth with sensible limitations in those domains could more effectively alleviate affordability pressures in high-demand regions, bringing spatial nuance to the 'supply scepticism' debate.

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10 December 2025

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Regional studies 59(1) 2025

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DOI: 10.1080/00343404.2025.2582638

https://www.tandfonline.com/doi/full/10.1080/00343404.2025.2582638

This Journal article is published under the centre's Labour programme.