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A new report from the European Central Bank (ECB) suggests that the Eurozone property market has reached a turning point. According to its Financial Stability Review, published last week, the expansion of the real estate market “may be coming to an end”.

“Euro area residential real estate (RRE) markets have shown strong price and lending growth,” says the report, which analysed several countries, including Portugal. However, “forward-looking indicators suggest a slowdown”.

The report notes that “overall, there are signs that the real estate expansion of recent years could come to an end, with overvaluation estimates and mortgage rates now standing at their highest levels in more than five years”.

As the review forecasts, this could result in a moderation in RRE prices, with monthly data indicating that some national market prices have been falling month-on-month since late summer.

The findings of the Financial Stability Review reinforce the ECB's expectations of a drop in house prices, although the Portuguese property market seems to have countered these expectations time and again, with investment still going strong.

The ECB report, which considered the impact of the energy crisis and rising prices and interest rates, warns that signs of a turn in the real estate cycle “may compound the vulnerabilities of euro area household incomes and balance sheets”.

The knowledgeable Algarve Home Sales team has lived and worked in Portugal for many years and is able to expertly guide you through the buying or selling process. Get in touch here for reliable advice.

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