Although Portugal’s property market saw a slowdown towards the end of 2018, a recent housing market survey from the Royal Institution of Chartered Surveyors (RICS) and Confidencial Imobiliário suggests that it appears to have stabilised and is set to trend upwards, albeit gently.
This survey covers Portugal’s three biggest housing markets, namely Lisbon, Porto and the Algarve.
The sales market
New buyer demand slowed in December 2018 but has held steady since then and survey respondents indicated that they had improved sales expectations when compared to December and were expecting to see some growth.
While optimism was muted in both Lisbon and Porto, there was more confidence in the Algarve, even though new sales instructions have been declining in all regions for almost two years (23 months) and there seems to be very little sign that this will change any time soon.
On the other hand, while limited supply may lower transaction volumes, it does help to increase prices (assuming demand remains at least reasonably strong as appears to be the case in Portugal).
Even though there are signs that homes are taking longer to sell and that they are only selling when vendors take a realistic approach to pricing, there is still cautious confidence in the near-term future with this level of confidence increasing over the longer term with a widespread expectation of average increases of 2% per annum over a five-year period. In other words, increases which are more or less in line with Portugal’s projected economic growth.
The lettings market
Rental expectations were positive in January, albeit only just, and there were signs of increased demand from tenants – but reduced instructions from landlords, which, in accordance with the laws of supply and demand, is causing rents to rise.
The level of growth, however, appears to be easing at least in comparison to a few months ago.
While there has been much debate about what effect (if any) Brexit will have on the Spanish property market, there seems to have been somewhat less comment about the Portuguese housing market even though it is also very popular with British buyers.
In all likelihood, regardless of what form Brexit eventually takes, it will continue to be ‘business as usual’ with regards to Portugal’s housing market for the simple reason that the country will continue to offer the attractions which made it popular in the first place.
These include the fact that the government is very eager to attract investment to the country.
What’s more, it seems highly improbable that there will be any great reduction in demand from local buyers since Portugal has done an excellent job of stabilising its economy and, in particular, of becoming one of Europe’s major tech hubs.
In fact, it is not at all out of the question that Portugal will become the EU’s main tech hub in the near future as the UK is due to leave the Union and Ireland has run into difficulties with the EU regarding its generous corporation tax rates.
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