Banking valuation of houses reaches a new peak

  • ECO News
  • 29 June 2017

Banking valuation of houses grew slightly, reaching a new maximum of 70 months in May.

Banking valuation of houses continues to set new records. The April maximum was overthrown by the new peak last month, although the increase was moderate. Each square meter is now worth one more euro than in April — 1,111 euros — and also 5% more than the May 2016 price; these data increases the fear of a real estate bubble in the Portuguese market.

Houses were responsible for the increase in the banking valuation, which made up for the 0.2% decrease in April with an increase of 0.5%, according to data from Statistics Portugal (INE); flats maintained their valuation. The average real estate valuation was 1,111 euros, while in April, it was 1,110; this new amount its the highest since July 2011.

Overall, Alentejo, North and Madeira Island lead the increases — a 1.2% increase for the first and 0.5% for the other two regions concerning banking valuation. Lisbon and Oporto had a -0.1% and 0.1% month-on-month variations, respectively. In comparison to the homologous month, prices are 5.8% and 5.3% higher.

Prices continue increasing — although Brussels had considered they reached their limit in 2016 — in light of the valuations made by financial institutions when lending money for the acquisition of real estate. The European Commission considered the 7.1% increase in 2016 was the limit after which the Portuguese economy would suffer imbalances.