Bank valuation of houses: highest value in 69 months

  • ECO News
  • 30 May 2017

Step by step: contradicting the fall seen in March, housing has valued. There was a 5.3% increase in comparison to 2016. In Lisbon, numbers surpass the Portuguese average, but are decreasing.

The bank valuation of houses’ ceilings are higher: only in July 2011 was there a higher amount. These data feed up the fear of a real estate bubble in Portugal. The price per square meter is now 1,110 euros, meaning three euros more than in March, is stated by Statistics Portugal (INE) this Monday.

The general tendency in Portugal is a 5.3% homologous increase and a 0.3% in comparison to the previous month. Lisbon, Algarve, the Madeira region and Alentejo show higher values than the national average. The price per square meter in the Algarve increased 9.8% in comparison to the previous year, while the Lisbon metropolitan area and the Azores together increased 6%. However, concerning the prices in March, Lisbon, Alentejo and the Algarve decreased 0.1%, 0.1% and 0.3%, respectively.

These values go back to levels prior to the Portuguese 2011 crisis. Nonetheless, this increase in not necessarily positive: the European Commission has already warned against the danger of unbalances in the Portuguese economy, considering the 7.1% increase in 2016 — Brussels already considered last year’s prices were on the edge.

Bank valuation of houses

Source: Statistics Portugal (INE)

Apartments banking valuation weights in the most in this increase, because it escalates 0.6% to 1,161 euros — seven more euros per square meter since March. Madeira and Açores surpass mainland Portugal: 1.1% and 2.9% more, respectively.

In comparison to the previous year, apartments in Algarve valued 9.5% — the same is to say, 119 euros per square meter. On average, this type of accommodation increased 5.4% in comparison to the same period of 2016.

The European Central Bank mentions an “excessive exuberance in housing prices”, speaking of Europe in general. However, ECB highlights the warning fits Lisbon, because the increase is happening due to the “strong presence of foreign buyers” and “low interest rates”. In Portugal, housing credit interests reached an historic minimum in April: a decrease to 1.012%. In addition, ECB states the need to have a closer monitoring of the real estate prices, since the current scenario adds vulnerability to that market and may come to affect the stability of financial institutions “more exposed to mortgage credit”.