House prices rise slow down to 5.2% in Q1

The rise in house prices in Portugal slowed in the first quarter, rising 5.2% year-on-year, 3.4 percentage points (p.p.) less than in the previous quarter, Statistics Portugal (INE) said on Wednesday.

In this period, the pace of growth in prices of existing homes outpaced that of new homes by 5.4% and 4.5%, respectively.

Compared to the previous quarter, between October and December 2020, the Housing Price Index (HPI) increased 1.6%, when it had risen 2.1% in the previous quarter, also registering, by category, in existing housing a variation rate of 1.7%, 0.1 p.p. above that recorded in new housing (1.6%).

Between January and March 2021, 43,757 houses were transacted, with a total value of 6.9 billion euros, reflecting increases, compared to the same period last year, of 0.5% and 2.5%, respectively.

The INE explained that this increase in transactions in the first three months of the year reflected the “expressive growth” observed in March (27.5%), largely reflecting a base effect due to the comparison focus on a month already affected by the economic impacts of the pandemic, March 2020, because, on the contrary, in January and February there were year-on-year reductions in the number of transactions (-8.3% and -14.1%, respectively).

“It should be remembered that in these two months, restrictions on mobility were introduced with the worsening of the pandemic and compared with two months in 2020 when the pandemic was just beginning its effect,” highlights the institute.

In March, by contrast, transactions increased 27.5% year-on-year, both in number and value, which INE says “largely” reflects a base effect due to the comparison being made to March 2020, a month already heavily affected by the pandemic.

In the first quarter of this year, 37,227 transactions corresponded to existing homes and 6,530 to new homes, increases of 0.6% and 0.3%, respectively, compared to the same quarter of the previous year.

Between the fourth quarter of 2020 and the first quarter of this year, the INE registers a reduction of 12% in the number of housing transactions (-11.6% in the 1st quarter of 2020), and a more significant reduction, in this period, of transactions of existing dwellings (-12.1%) than new dwellings (-11.3%).

The value of homes transacted, in the last quarter, amounted to €6.9 billion, of which €5.6 billion related to existing dwellings and €1.3 billion to new dwellings, representing year-on-year increases of 2.5%, in the case of the total, and 4.1% in the category of existing dwellings.

Concerning new housing, the value calculated by INE shows a reduction of 3.7% compared to the same quarter of 2020.