Prices for property in Portugal have shown signs of stabilisation as both demand and the supply level out.
According to the latest survey from Confidencial Imobiliário and RICS (Royal Institution of Chartered Surveyers), the results from April have shown a loss of momentum in the market, however this has not been seen as negative, rather than a levelling of the market in general after a period of intense growth.
In terms of demand, the April survey reveals a decline in inquiries by potential customers - a net balance of -7% of respondents refers to a decline in new consultations and this is already the seventh month since the last positive reading of this indicator.
Meanwhile, the agreed sales declined for the second consecutive month on a national level, presenting, when disaggregated at the regional level, a downward trend in Lisbon and the Algarve, but remaining stable in Porto. Regarding the sales prospects for the next three months, the respondents presented only marginally positive expectations for all of the three regions.
On the supply side, the new sales instructions fell again in April, with a net balance of -33% of respondents reporting a decline (this is the lowest reading since December last year). Despite this, price growth continued to soften at a national level, and only a net balance of +7% of respondents reported a rise in prices in the period under review (the most modest balance in four years).
In regional terms, respondents reported a stabilisation of prices in Lisbon and Algarve, although in Porto they continued to show solid growth. Expectations for the next 12 months continue to be revised at a lower level, with respondents now expecting price growth to be 1 percentage point lower than they were just two months ago.
Simon Rubinsohn, Chief Economist of RICS, confirms that "although the growth of the Portuguese economy has gained new momentum in the first months of 2019, the housing market seems to be losing momentum." From the perspective of the economist, "since consumer confidence levels remain relatively strong, this loss of momentum suggests that the influence of other factors, such as the financial capacity for access to housing and the lack of supply".
According to Ricardo Guimarães, director of Confidencial Imobiliário, "almost all respondents' comments confirm that investors are more cautious, looking for the best opportunities and are aware of the risks of overvaluation. Sellers are also reviewing their low expectations, and some are already lowering the asking prices for their properties. Some operators consider that the volume of new homes under construction will also put some pressure on prices, especially in the resale market. At the same time, despite the decline in new lending, traders feel that restrictions on access to credit are limiting potential demand. "