Falling supply at a time when demand is rising is helping the residential property market in Portugal recover with the latest index report showing prices are rising.
Like its neighbour in Spain, the property market in Portugal was hit hard by the global economic downturn with overseas buyers falling but now estate agents are seeing a strong pick up and developers are also reporting rising interest.
House prices growth in September was driven by a widening mismatch between rising new buyer enquiries and falling sales listings, according to the latest report from the Royal Institute of Chartered Surveyors (RICS) and Confidencial Imobiliário.
Similarly, landlord instructions remain in short supply and this continues to be a factor squeezing rents higher, the report, which covers Lisbon, Porto and the Algarve, also points out.
In the sales market, new buyer enquiries rose at a solid pace. Estate agents reported the fastest monthly growth in buyer enquires in two years. Meanwhile, the flow of new sales instructions coming to market fell noticeably during September as each region covered posted a decline in fresh listings.
Alongside this, sales rose firmly, with a net balance of 25% of respondents seeing an increase in transactions. Looking ahead, sales are expected to continue to rise over the coming months.
The report explains that a widening mismatch between supply and demand is driving an acceleration in house price inflation. Indeed, house price growth has now gathered pace in each of the last seven reports, with the latest increase the sharpest on record since the survey started in 2010.
Over the year ahead, respondents continue to expect Lisbon to post the strongest house price growth on a regional comparison. Over the next five years, contributors anticipate house price inflation will accelerate across all three areas, with growth expected to exceed 4% per annum in each case.
The national confidence indicator, a composite measure of near term price and sales expectations, retraced some of the lost ground over the past few months, rising to +30 from +24 previously. That said, the indicator still remains some way off the +42 reading reached during May earlier this year.
In the lettings market, landlord instructions continued to decline and have now done so relentlessly since the middle of 2013. Alongside this, tenant demand remains firmly on the up, rising at an exceptionally strong pace again in September. Consequently, rents continue to be squeezed higher with a net balance of 43% of respondents reporting an increase in the latest report
Ricardo Guimarães, director of Ci, explained that new taxes on real estate were mentioned by estate agents as an area of concern, mainly due to the impact on both investors’ expectations and confidence.
