The Royal Institution of Chartered Surveyors (RICS) reports that more dramatic price falls and negative market expectations are easing in key locations around Portugal, which is good news for a country that continues weather storms created by the Eurozone debt crisis. Rental activity and rates are still weak, but the report suggests the damage has lessened throughout July. While still negative, the residential real estate confidence index showed some improvement for the month, which RICS analysts are taking as a sign of relative stabilization. For more on this continue reading the following article from Property Wire.
The residential sales market in key locations in Portugal is stable and negative prives expectations are less widespread, according to the latest real estate index from the Royal Institution of Chartered Surveyors and Confidencial Imobiliário.
The July index also says that lettings activity is weak and rents continue to fall with activity in the market stalling.
Overall the report, which covers the sales and lettings markets on Lisbon, Porto and the Algarve, says that there is an impression of a less negative market dynamic than was the case six or 12 months ago.
In the sales market the headline price balance for July, at minus 37, is almost unchanged from May and June and although still in negative territory and indicative of falling prices.
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The report says this suggests that price falls are now less widespread than they have been in recent years. The balance of agreed sales also looks quite stable across recent months with July’s reading coming in at minus eight.
The national confidence index, which is a composite measure based on price and sales expectations, reached its least negative value since September 2010 at minus 13. This more positive reading was in part the result of the price expectations balance, which in July recorded its least negative reading since the survey began, at minus 30.
The report points out that the lettings market has for some time benefited from the fallout in the sales market, as households who cannot access mortgage finance opted to rent instead.
However, this month there were renewed signs that activity in the market may be running out of steam. Tenant demand firmed a touch, but new landlord instructions actually fell for the first time since the series began.
The sustained fall in rental values over recent years, which is reported to have continued this month, and the expectation for further falls to come, may be making the lettings sector less attractive to home owners.
Regionally, landlord instructions are now falling in Lisbon and the Algarve, while they are flat in Porto. Rents are expected to fall across all three regions.
‘July was a period of high uncertainty, thanks to the instability of the government coalition. After a relative improvement in sentiment during the past few months, agents are hoping the latest political setbacks won’t hit confidence in the market,’ said CI spokesman, Ricardo Guimaraes.
While RICS senior economist, Josh Miller said that the July survey results point to further very tentative signs of a trend towards stabilization in the sales market. ‘But the lettings market is running out of steam, with new landlord instructions now falling alongside rents,’ he added.
This article was republished with permission from Property Wire.