The residential housing market in Portugal continues to see high demand in the face of limited supply, which combined with an increase in credit activity has led to house price returning to pre-crisis levels across the country.
According to Portuguese Housing Market Survey (PHMS) conducted by Confidencial Imobiliário (Ci), the housing market in Portugal continues to gain in strength which has led to the rise in house prices.
“The residential market is benefiting from an increase in new credit activity, which, coupled with the imbalance between supply and demand, is allowing prices to approach pre-crisis levels,” said Ricardo Guimarães, the Director of Ci.
He added: “The Residential Price Index as calculated by Confidencial Imobiliário is now less than 1% below the maximum recorded in 2010.”
The October PHMS also revealed that traders (agents, owners and developers) expect house prices to continue to rise by an average of 5% over the next 12 months, a revision on the initial 4% growth outlook which was reported in September, demonstrating growing confidence in the housing market in Portugal.
Over the long term, the future is looking equally bright for the Portuguese housing market with prices expected to increase at an average rate of around 6% over the next five years.
“Confidence in the market remains high as the price growth movement is not only based on increased funding but it is also supported by the dynamics of other sources of demand, such as short term leases,” said Ricardo Guimarães.
The areas which have experienced the highest demand for properties in Portugal remain Porto, Lisbon and the Algarve. These areas have also shown a slight decrease in the supply of properties available for potential buyers.
Simon Rubinsohn, the Chief Economist of RICS said: “The Portuguese economy continues to show one of the strongest levels of growth in Europe, with GDP growth accelerating in the third quarter of the year, Consumers have seen their real incomes rise as inflation continues to remain low and the unemployment rate at near lows for almost a decade.
“After years of struggling, families in Portugal are able to increase their spending, helping to boost the recent strength in the residential market.”