The residential real estate market is improving in Portugal, although the overall outlook remains negative according to real estate indices. Industry experts point to high unemployment as the underlying cause of the low demand in the housing market, an observation bolstered by sharp increases in the country’s rental market. Higher lending limitations are also making it difficult for potential buyers to enter the market, even as home prices continue to fall. For more on this continue reading the following article from Property Wire.
The residential property market in Portugal is seeing a slight improvement but overall remains negative, according to the latest Royal Institution of Chartered Surveyors/Ci Portuguese Housing Market Survey.
Both the National Activity and National Confidence indices improve in July but weakening demand remains the main factor weighing down on prices and agents are experiencing much sharper price declines than developers, it also shows.
The National Activity and National Confidence indices improved by 16 and 11 points respectively to -25 and -49. However, the national price balance fell from -48 to -55, having improved last month.
At the national level, the latest results show that price declines continue to be driven principally by falling demand. Indeed, rising supply is not presently an issue. ‘In Portugal, it is the demand side of the equation that is weighing down on prices. Indeed, the double digit unemployment rate is feeding through to weakness in new buyer enquiries,’ said RICS senior economist, Josh Miller.
‘Unlike in Spain and the US, oversupply is not an issue in Portugal. The official statistics show no evidence of over building prior to the economic downturn and new vendor instructions have been falling all year. Therefore, once the economy starts to recover, Portugal will not have to cope with the residential inventory issue that other countries face,’ he explained.
The July results also highlight that residential agents continue to experience much sharper price falls than developers. Moreover, this trend is not only apparent at the national level, but is also clearly evident in each of the three regions covered by the survey of Lisbon, Porto and the Algarve.
The report points out that the national picture masks some interesting regional variation. While prices continue to fall across all three regions and at broadly the same pace, price falls
nevertheless slowed in the Algarve, but accelerated in Lisbon and Porto.
And although sales expectations remain negative across all three regions, they deteriorated in Porto and improved somewhat in Lisbon but they markedly improved in the Algarve, almost to the point to where they turned neutral.
‘Survey respondents note that limited residential sales are due to tight credit constraints and the government’s fiscal austerity measures, which are reducing families’ incomes,’ said CI Spokesman, Ricardo Guimaraes.
‘Because of the difficulties buying a home at the moment, many families are instead turning to the rental market, which is experiencing a boost in activity,’ he added.
This article was republished with permission from Property Wire.