Despite relative stability, housing markets remain “vulnerable to economic fluctuations that affect real estate prices,” such as: B. Recessions, changes in interest rates and changes in employment.
This is the warning issued by Brussels in a detailed analysis of Portugal as part of the autumn package. The document contains the European Commission highlights the “remarkable stability” of properties in the country, but believes that the housing sector “continues to be closely watched” with the “still inadequate” supply.
In the research report on the economic situation of the country and especially on the real estate market, Brussels indicates that the number of completed apartments in Portugal increased by 12.3% in the second quarter of 2024, after a decline of 5.7 % in the previous quarter, and that construction permits rose by 6.6%, after a “sharp decline of 19.4%” compared to the previous quarter. However, despite the reported increase in house building, the Commission emphasizes that “the supply of housing is still not sufficient to keep up with the demand.”
“unlikely” sharp decline
Brussels notes that house prices have “almost doubled in the last seven years” due to continued demand and limited supply, but considers a sharp decline “unlikely”.
In the first half of 2024, only about 35% of housing transactions were financed through loans, which Brussels believes confirms “the important role of money buyers and non-resident investors” who helped by protecting the market from changes in borrowing costs.
In addition, the report said that limited housing supply combined with rising construction costs and job shortages “reduce the likelihood of a significant price correction in the near future.”
The European Commission believes that “the Portuguese real estate market has shown remarkable resilience in recent years”. One of the main factors behind this stability is the relatively low loan-to-value ratios in mortgage portfolios, with only 6% of loans exceeding 80% loan-to-value ratios -value.”
“This suggests that banks are well placed to absorb potential falls in house prices without incurring significant losses.”
However, he notes that the country’s housing market “still deserves careful scrutiny.” “Brussels recalls that the increase in house prices in recent years “has been supported by the strong presence of non-resident owners and buyers on the market as well as restrictions supply”, but that these price increases have not been accompanied by a share. growth in family income”, a situation that exacerbated “affordability issues and increased uncertainty about long-term price trends.”
2024-11-30 19:07:00
#Portuguese #real #estate #remains #vulnerable #Portugal #News
## Portugal’s Housing Market: Resilient but Vulnerable, Says European Commission
**the Portuguese real estate market has displayed notable resilience in recent years, but vulnerabilities remain due to ongoing supply shortages and the influence of non-resident buyers, according to a recent report by the European Commission.** While the market appears stable for the moment,the Commission stresses the need for continued vigilance and adjustments to ensure long-term stability.
To delve deeper into the complexities of Portugal’s housing landscape, we spoke with two leading experts: **Dr. Margarida Alves**, a Professor of Economics at the University of Lisbon and a specialist in real estate markets, and **João Silva**, Founder and CEO of a leading Portuguese real estate investment firm.
**Understanding the Resilience**
### Low Loan-to-value Ratios and Limited exposure
**World Today News:** Dr. Alves, the European Commission report highlights the remarkable resilience of portugal’s housing market. what factors have contributed to this stability?
**Dr. Alves:** “Portugal’s mortgage market is relatively conservative. We see low loan-to-value ratios,meaning homeowners generally have significant equity in thier properties. This minimizes the risk of widespread defaults, even if property values were to experience a downturn. Additionally, the presence of a significant number of cash buyers, including non-resident investors, has cushioned the market from interest rate fluctuations.”
**World Today News:** Mr. Silva, you operate in the heart of the Portuguese real estate market. How have you witnessed these factors play out?
**João Silva:** “The low loan-to-value ratios have definitely provided a safety net. We’ve seen less vulnerability to interest rate changes compared to other European countries.The influx of foreign buyers, notably from countries with stronger economies, has also injected liquidity and stability into the market.”
### Supply and Demand Dynamics
**World Today News:** The Commission report also acknowledges the concerning issue of inadequate housing supply. How is this affecting the market?
**Dr. Alves:** “Limited supply drives up prices, making housing increasingly unaffordable for many Portuguese citizens. While construction activity is picking up, it’s not keeping pace with the demand, both from domestic buyers and foreign investors.”
**World Today news:** Mr. Silva, what are the implications of sostenable housing supply for long-term market stability?
**João Silva:** “we risk creating a bubble if we don’t address the supply shortage. Prices will continue to rise, making home ownership unattainable for many.This could lead to social problems and ultimately instability in the market. We need policies that encourage responsible development and make it easier to build new homes.”
**Looking Ahead: Challenges and Opportunities**
### Price Trends and Affordability
**World Today News:** The report notes a “sharp increase” in house prices in recent years. what are your predictions for future price trends?
**Dr. Alves:** “A sharp decline seems unlikely in the near term due to strong demand and limited supply. Though, a correction is absolutely possible if interest rates rise considerably or if the influx of foreign buyers slows down. This would impact affordability for both domestic and international buyers.”
**João Silva:** “I agree that a dramatic crash is unlikely. However, we could see more moderate price increases in the future. The focus needs to shift towards building more affordable housing to ensure a diverse and lasting market.”
**Key Takeaways and Call to Action
The Portuguese housing market presents a unique mix of strengths and vulnerabilities. While the current stability is commendable, policymakers need to address the supply shortage and affordability concerns to ensure long-term resilience. Diverse housing options, sustainable development policies, and responsible investment practices will be crucial in shaping the future of Portugal’s real estate landscape.
**What are your thoughts on the future of Portugal’s real estate market? share your perspectives in the comments below.
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