• Demand and sales continue to rise
• House price inflation remains firm
• Strongest Confidence Index figure since Sep 2018
The December 2021 RICS/Ci PHMS results portray a generally upbeat market backdrop, with buyer demand and sales volumes continuing to rise, while expectations point to a positive trend remaining in place over the near term. Even so, the lack of new instructions coming onto the market remains an issue, and this could stifle activity further down the line unless an improvement comes through.
With respect to the demand, a headline net balance of +11% of respondents reported an increase in new buyer enquiries over December. As such, this marks a ninth consecutive month in positive territory for this indicator, albeit the pace of demand growth appears to have been relatively modest of late. The shortage of fresh listings becoming available meanwhile has shown no sign of easing in recent months, with the latest net balance sinking to -31% compared to -12% previously.
Notwithstanding the lack of supply, agreed sales still increased during December, evidenced by a net balance of +12% of contributors citing a rise. That said, while the latest feedback points to a solid trend in activity across both Lisbon and the Algarve over the month, the sales metric slipped into negative territory in Porto. Back at the headline level, near-term sales expectations remain comfortably positive, returning a net balance of +25% (marking the highest figure since August 2021). What’s more, all regions covered exhibit a positive assessment for the sales outlook in the coming three months.
In terms of house price growth, the headline indicator posted a net balance of +33% in December. This is up from +28% beforehand and also marks the strongest reading in three months. Looking ahead, a net balance of +60% of survey participants now expect house prices to continue to increase over the course of 2022 (a fresh record high for the series). The weighted confidence Index (a combined measure of near-term price and sales expectations) posted a figure of +27 in December, up from +21 beforehand and the most upbeat reading since September 2018.
In the lettings market, a net balance of +22% of respondents cited an increase in tenant demand over the month. With landlord instructions still in decline, this imbalance between supply and demand is expected to drive rents higher.
Ricardo Guimarães, Director of Ci: “The market ended 2021 with a y-o-y price increase of 12.2%, according to Confidencial Imobiliário’s house price index. At the same time, following SIR results for the year, a new record of number of transactions was reached across the market, only comparable to the pre-financial crisis figures. Therefore, the market is enthusiastic about its performance and confident about the chances of making 2022 an even better year. Despite that, agents are aware of new risks, especially from inflation. Naturally, the pandemic is mentioned as a short-term obstacle, particularly after developments over the past month.”
RICS Senior Economist, Tarrant Parsons: “The Portuguese economy looks set to have expanded by close to 4.5% during 2021, while current projections point to a similar outturn over the coming year. What’s more, the unemployment rate has continued to fall sharply in recent months, and is now well below its pre-pandemic level. This backdrop should provide solid support for the housing market, in keeping with the strong confidence index measure returned in December.”
Source: Confidencial Imobiliário. (02/2022)
Brought by Artur Cruz – East Algarve Real Estate Agent