Academic journal article Economics & Sociology

Economic Effects of Second Homes: A Case Study in Portugal

Academic journal article Economics & Sociology

Economic Effects of Second Homes: A Case Study in Portugal

Article excerpt

Introduction

In Portugal, according to the National Population and Housing Census, the number of second homes grew by 73 per cent in the period 1991-2011. Their number reached almost one million one hundred thousand in 2011, which means that nearly a third of families owed such homes. Although generally following the trends in many European countries, the expansion of second homes in Portugal has had some special features that are strongly related to emigration and out-migration and the consequent depopulation of many rural areas where, apart from new housing construction, the emigrants' and out-migrants' first homes are frequently converted into second homes.

There have been two opposing types of arguments on the issue of the economic effects of second home expansion on local development: some say that second homes represent an additional burden to the management of public goods, since investments needed for building and maintaining physical infrastructure and social services are not compatible with their temporary use; others see second homes as an opportunity for many rural areas, especially those marked by depopulation, to take advantage of some additional revenue, whether through property taxes, or by an increase in consumption.

The purpose of this paper is to contribute to the discussion of the economic effects at the local level of the second home phenomenon by bringing about findings from a case study of a rural region in the central part of Portugal. To this end, the results of a survey of second home owners, conducted in the Oeste, a region NW of the Lisbon Metropolitan Area (LMA), as a part of the research project "Expansion of Second Home and Spatial Development Planning in Portugal" (SEGREX) financially supported by the Portuguese Foundation for Science and Technology, are discussed.

1. Literature review

Second homes as a real estate investment or an alternative dwelling lifestyle produce effects of various order, nature, magnitude, significance, extent and effects through their both physical features and usage. In the focus of this paper are the economic effects of second homes. Major common findings from research on the economic effects of the second home phenomenon worldwide have been that the nature of positive or negative effects depends on (i) the rural or urban character and the level of development of second home location; (ii) the length of stay; and (iii) the distance from the first home (Hoogendoorn, 2010; Marcouiller et al., 2013).

In rural areas affected by demographic and economic decline the benefits of the expansion of second homes seem to outweigh the negative effects. Several studies in such areas showed the importance of second home owners as consumers of local products and services, thereby contributing to some revitalization of a stagnant, poorly diversified rural economy (Nordin, 1994; Green et al., 1996), as well as that it is proportionate to the length of the owner's stay and to the time/distance to the first home. Paris (2006) came to the same conclusion after reviewing the literature on the expansion of second homes in Europe and North America. Gallent & Tewdwr-Jones (2001) demonstrated the potential of such expansion for the development of tourism and leisure-related services. Other authors showed how second home tourism may be important to the survival of local small agricultural producers who may prefer second homes users as alternative consumers to selling through major distribution chains (Sannebro, 2001). Also Müller (2004) argued that owners of second homes, including foreigners, consume as much or more local products and services than permanent residents. However, this demand for agricultural products by temporary residents may cause price inflation, which may affect the purchasing power of the local population. Hoogendoorn and Visser (2004) showed the importance of the construction and renewal of houses for second home use to the local economy since that is in charge of local contractors and workers and also most of the materials are purchased locally. …

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