Property prices and rents in Portugal continue to grow, latest index shows
Property price growth in Portugal is continuing to accelerate due to a lack of supply and rents in the residential market are also rising strongly, the latest index data shows. The lack of supply is affecting the main residential areas of Lisbon, Porto and the Algarve covered by the monthly surve
Published -
Apr 9, 2018 5:03 AM
Property price growth in Portugal is continuing to accelerate due to a lack of supply and rents in the residential market are also rising strongly, the latest index data shows. The lack of supply is affecting the main residential areas of Lisbon, Porto and the Algarve covered by the monthly survey index from the Royal Institution of Chartered Surveyors and Confidencial Imobiliário. Growth is predicted rise further and survey respondents continue to foresee headline house prices increasing by around 4.5% over the next 12 months, with this rate anticipated to accelerate to around 5.5% on average over the next five years. Prices grew by 12.8% at the national level in 2017 but in Lisbon’s historical centre, prices increased by 21.1% year on year and have doubled since 2013. On a regional basis respondents in Porto envisage the strongest price growth over the next 12 months, although the Algarve displays the firmest projections on a five year horizon. Feedback across the lettings market tells a very similar story, as rents continue to rise sharply due to the demand/supply imbalance. For the time being at least, respondents appear unconvinced that this trend will see any meaningful change in the near term. Overall, demand from new buyers increased for the second month running in February 2018 as a net balance of +25% of respondents noted an increase at the headline level compared to +23% in January. Sales also picked up modestly over the month, although the rate of increase softened somewhat relative to January. Going forward, a net balance of +32% of contributors expect sales to increase further over the coming three months. Meanwhile, new instructions to sell continued to decline, and this indicator on supply coming to the market has now remained in negative territory for 11 months in a row. On the back of this, the report says, house price inflation gathered momentum in the latest results, with the price growth gauge climbing to post a net balance of +52% and this represents the second strongest reading since the survey began in 2010. The national confidence indicator, a combined measure encompassing near term price and sales expectations, came in at +37 and the report says that while this has slipped from the record high of +47 posted in January, it still signals solid momentum. ‘Top markets see new records every quarter and the most expensive prices previously have become just averages in the present. These quick changes have raised concerns for some respondents about developers and buyers operating in secondary locations, where prices might become unaffordable relative to local rationales,’ said Ricardo Guimarães, director of Ci. According to Simon Rubinsohn, RICS chief economist, macro fundamentals continue to improve consistently across the Portuguese economy. ‘Indeed, employment and household incomes are rising, consumer confidence remains elevated, and credit conditions have eased further over recent months. Given this, the outlook for housing market activity appears solid as we move through 2018,’ he said.
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