By Sergio Goncalves

LISBON, Jan 7 (Reuters) - Portugal's tax exemption scheme to help young people buy their first homes is proving effective amid the country's housing crisis, with more than 70,000 applicants benefiting in just over a year, the finance minister said on Wednesday.

Joaquim Miranda Sarmento also told a parliamentary committee that more than half of the initial 1.2 billion euro ($1.40 billion) package of public guarantees for banks providing mortgages to young buyers had already been used, and the government had subsequently increased it by 350 million euros. 

Some 23,000 buyers have used such guarantees.

"I believe these measures are now considered successful, having enabled many young people to buy homes," he said.

The scheme, effective from late 2024, exempts most young buyers aged up to 35 from property transfer tax (IMT) on first homes valued at just over 300,000 euros, with a partial exemption on homes costing a little more than 600,000 euros.

In Portugal, IMT rates are progressive, ranging from 2% to 8% of the value of the property.

Portugal's housing crisis, which particularly affects young people, stems from a chronic shortage of affordable homes, exacerbated in recent years by an influx of wealthy foreigners buying property.

The problem is worst in major cities such as Lisbon, where house prices have tripled and rents more than doubled in the past decade.

"We have an imbalance between supply and demand, that's what has been driving prices up and we need to increase the supply of new homes, but that takes time," the minister said.

($1 = 0.8559 euros)

(Reporting by Sergio Goncalves; editing by Andrei Khalip)