With housing prices plummeting as supply outstrips demand, prospects for Portugal’s property market are dismal. Weak economic fundamentals – including an 11% jobless rate – are manifesting in poor housing performance, while the impact of a potential IMF bailout is uncertain. See the following article from Property Wire for more on this.
The real estate market outlook in Portugal is poor as house prices fall at a faster pace, driven by further weakness in the Lisbon and the Algarve, a new report indicates.
Buyer interest continues to fall, while new instructions to sell property increases to such an extend that confidence in the short term sales and price outlook remains weak across all regions, according to the November Portuguese Housing Market Survey from the Royal Institution of Chartered Surveyors and Confidencial Imobiliario.
It shows an increasing number of respondents reporting falling rather than rising prices over the last three months. This was driven by further weakness in the Lisbon Metropolitan Area and the Algarve while sentiment remained unchanged in the Oporto Metropolitan Area.
It says that transaction activity continued to fall at roughly the same pace as last month and weaker sentiment over past prices continues to be fueled by a combination of falling demand and rising supply.
Indeed, the survey results show that new inquiries from potential buyers fell at a faster pace than in October, while new vendor instructions to agents continued to increase, though at a slightly weaker pace than last month.
Survey respondents turned increasingly pessimistic over the short term outlook for prices and sales and the data shows this was mainly driven by agents. In terms of the short term price outlook, survey respondents remain highly downbeat across all three regions covered in the survey. However, one encouraging sign is that respondents in the Algarve were slightly less pessimistic than last month.
‘The November RICS/Ci data shows that a combination of rising instructions to sell property and falling buyer inquiries continues to weigh down on house prices. Given this supply/demand dynamic, survey respondents expect prices to fall further over the near term,’ said RICS Senior Economist, Josh Miller.
‘The weakness in housing market sentiment reflects wider economic fundamentals; the labor market is in particularly bad shape with unemployment currently at 11%, compared to 10.2% this time last year,’ he added.
According to CI spokesman Ricardo Guimaraes respondents expressed concern over the state of the housing market in light of a possible financial bail out by the International Monetary Fund. ‘However, respondents are interpreting the possibility of a greater role played by the European Union in the current crisis, as has been recently indicated, as a more favorable outcome to the housing market than IMF involvement because of less stringent conditionality that is perceived to be attached,’ he explained.
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