Portugal’s property market began levelling off around this time last year, after a heady fall and years of depressed activity following the 2008 crash. Price stabilization is not yet complete, but there has been a surge of interest in the Portuguese market.
That’s the message from the Royal Institute of Chartered Surveyors (RICS) latest report into the subject. RICS’ monthly Portuguese Housing Market Survey (PHMS) uses around 100 regular respondents to build a picture of people’s attitudes to the housing market in Portugal, and the picture is looking rosier than it has for some time.
The RICS report showed that sales didn’t change too much in the last quarter in terms of volume. But interest in the form of new buyer enquiries has pushed up sales expectations for the next three months; it’s at its highest level since the survey was launched in 2010. The national confidence index leapt from +6 to +16, the highest it’s ever been and the third successive month to show a positive value.
As much as that sounds like good news, it’s not chicken-counting time for Portugese property owners just yet. The boost in interest has yet to be reflected in increased prices, and in fact prices are starting to stabilise in Portugal as we reported last month. That fall is expected to continue, though so is the trend for the rate of fall to reduce.
Ricardo Guimaraes, a spokesman for data provider Confidencial Imobliario, attributes the more positive outlook in the market to “the obvious reduction in house prices… [which] has led to potential buyers seeking opportunistic bargains,” as well as “the slightly more upbeat economic news of late,” which he said was “improving both households’ and investors’ confidence.”
Nor is this increase in confidence regional. The RICS survey shows that interest is rising across the three main regions covered in the survey – Lisbon, the Algarve and Porto. The report indicated that this interest was expected to translate into a long-term rise in price and volume. This will be reassuring news for owners in the Algarve, where prices have followed bank valuations downward almost continually since 2008; referring to this, Mr. Guimaraes observed that, in the light of the RICS report “agents are anticipating whether or not this will have an impact on credit availability from banks.”
Another key indicator of the overall health of the housing market, rental, showed signs of recovery too. Portuguese rents have been falling for some time, but the rate is slowing while tenant demand falls. A report from Confidencial Imobliario in February this year showed that rents actually rose an average of 0.1% across Portugal in the last quarter of 2013. As the two metrics converge, rent expectations and volume expectations also converge, indicating a rental market that is levelling out.
RICS senior economist Josh Miller pointed out that the January results showed buyer interest returning to the market, and said that though sales were expected to pick up in the months ahead, at the moment, “there is little sign of this filtering through into prices. The recent GDP figures also portray an upbeat message although the recovery still has a way to go until it is firmly entrenched.”