How’s real estate market in Portugal?
Sales market activity continues to slow
- Buyer enquiries and sales dip over the month
- House price growth continues to fade
- Rental demand still rising
The May 2019 RICS/Ci PHMS results suggest the housing market is still struggling for momentum as key activity indicators covering demand, sales and instructions all remain in negative territory. By way of contrast, conditions are a little firmer in the lettings market, with demand continuing to rise and this is expected to push rents slightly higher over the coming months.
Starting with the sales market, new buyer enquiries reportedly softened again, as a net balance of -15% of survey participants noted a decline over the month. What’s more, demand declined to a greater or lesser degree across all regions covered (Lisbon, Porto and the Algarve). At the same time, the volume of homes being listed for sale continues to dwindle. Indeed, the survey’s indicator on new instructions has been stuck in negative territory for over two years, while the resulting lack of stock is likely a significant factor dampening demand.
Alongside this, agreed sales slipped once more, with a net balance of -9% of respondents reporting a fall during May. Moreover, this marks three consecutive months in which sales have weakened at the headline level. Looking ahead, sales expectations are now broadly flat, with the net balance of -3% representing the weakest reading since 2013 .
The headline series on house price inflation remains in positive territory, but only marginally so. May’s reading of +6% is the most modest since 2014, having eased noticeably over the past six months. From a regional perspective, price trends were cited to be completely flat over the month in Lisbon, while Porto and the Algarve saw slight increases. Going forward, prices expectations for the coming twelve months are still slightly positive, although, at +18%, the net balance is the least elevated since the series was introduced back in 2015.
The weighted confidence index (a combined measure of near term sales and price expectations) dipped to -5, from +2 in the previous report. Even so, a figure so close to zero is more or less indicative of a flat short term outlook.
In the lettings market, respondents continue to report rising tenant demand alongside a tight supply backdrop. As a result, rents are expected to rise further over the coming three months, even if projections are only pointing to modest growth.
Source: Confidencial Imobiliário