Low interest rates, local housing slowdown house prices in Portugal
The European Commission said that price moderation will remain slow due to low-interest rates and homes continuing to be channelled into local accommodation.
The rise in house prices in Portugal slowed earlier this year, but the European Commission said that price moderation will remain slow due to low-interest rates and homes continuing to be channelled into local accommodation.
Although there has been an increase in the supply of new homes and building permits, which has contributed to slowing down the rise in prices, the pace of price moderation is likely to remain slow in light of an environment of low-interest rates and increased use of property for short term rentals, a report following the tenth post-programme monitoring mission that took place between 14 and 19 June in Lisbon showed on Tuesday.
After a strong recovery that began in 2015, the pace of growth in house prices remains high, the document said, which notes that the pace slowed down somewhat earlier this year compared to 2018.
In the first quarter of this year, house prices rose by 9.2%, reflecting a slight slowdown from the 9.3% seen in the immediately preceding quarter and the annual average of 10.3% in 2018.
The number of sales also registered a slowdown, both in the most touristic regions, such as the Algarve and in the metropolitan areas of Lisbon and Porto, where this trend was even more marked.
This situation, it was mentioned, points to some moderation in demand, which is most likely related to prospects of a slowdown in the world economy, affecting market expectations for tourism and the demand for real estate by non-residents.
Regarding the areas of the country where the real estate market has been more dynamic, the report noted that in the Algarve and Porto the price increase remained above average, while in Lisbon the opposite happened.
The substantial recovery in the number of newly constructed buildings observed in the Lisbon metropolitan area contributed to this situation.
The slowdown in the pace of price growth was also felt more in new housing transactions than in used houses, but the report notes that new construction sales account for only 15% of total transactions and 19% of total value traded.