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In Portugal the price of houses will accelerate and rise 6% this year, but will then step on the brake

In Portugal the price of houses will accelerate and rise 6% this year, but will then step on the brake

The recovery of the Portuguese housing market is moving at a rapid pace, fueled by improved economy, lack of product supply and strong demand from foreign buyers and low interest rates. For all this, home prices are expected to close the year with a 6% growth this year, but in the coming years will see a cooling of the rises. Standard & Poor’s expects to post a 4.5% appreciation in 2018 and 3% in the next two years.

To support these figures, the rating agency recalls that the number of residential real estate transactions in the first quarter of 2017 increased 19.4% year-on-year, after increasing by 18.5% in 2016. Demand is concentrated in homes already Constructed, while activity in the new construction market has been recovering very slowly. In this segment, operations rose only 0.9% in 2016 and 1.9% in the first quarter of 2017.

While house prices rose 7.6% in 2016 and 7.9% in the quarter of 2017, compared to the same period, according to the National Institute of Statistics. Existing homes saw their prices increase by 9.2% in the first quarter, while prices of new homes grew by 4.2%. Still, according to the US financial rating agency, the Portuguese residential market remains relatively cheap compared to other countries, with affordable prices and special incentives that continue to attract foreign buyers.

Given that the Portuguese economy is experiencing a strong growth momentum – with GDP accelerating to 2.8% annually and a steady rate of job creation that supports private consumption – and interest rates on housing loans Remain at low levels, Standard & Poor’s expects the real estate market to recover, but at a more moderate pace at the end of the decade than it is currently.

This scenario is in line with several real estate managers, who have been rejecting the existence of a real estate bubble in Portugal, arguing that in the coming years, the market will grow at sustainable prices, around 3%.

Source: Idealista

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