Slowdown in property prices in Q3
House prices increased by 7.1% in the third quarter of 2020, the lowest increase in residential property prices for four years.
Part of the slowdown was caused by a reduction in demand as sales also continue to fall, fuelled by uncertainties and insecurities around the Corona virus crisis and a reduction in demand from overseas buyers restricted from travelling to and from Portugal.
The slowdown compounded a trend which had already been evident in the previous quarter of the year (Q2) but although falling house sales also accompanied the slowdown in price rises, more homes were bought and sold in Q3 than in Q2.
The data was released on Tuesday (22 December) by the National Statistics Institute (INE) which stated that houses increased on average by 7.1% in the third quarter of 2020 compared with the same period last year, and below the 7.8% seen in the second quarter. This like-for-like growth was the lowest for four years.
There has been a marked slowdown in quarterly terms too. Between the second and third quarters of this year, house prices remained almost stagnant, with an increase of 0.5%, the slowest rate of growth since 2015.
This trend was also seen in new build homes where prices increased 5.8% like-for-like while second-hand homes saw a growth rate of 7.4%, values which for both were below the rates previously seen in other quarters.
Despite the cool down in prices, there was a recovery in the number of sales in the third quarter when 45,136 properties changed hands, an increase of 35% in relation to the second quarter. Nevertheless, in relation to last year, the number of sales in the third quarter fell 1.5%.
Despite the recovery in sales, the average price for homes fell. The 45,136 houses represented a total value of €6.7Bn, which means an average house price sale of €149,500, below the €154,000 registered in the second quarter.
In terms of areas sold, 60.9% o the total number of properties sold were in the Lisbon Metropolitan Area and the North.
The central regions of Portugal saw an increase in the weighting of house sales of around 21.3% while the Algarve had 7.3% of the pie.
But despite the Portuguese residential property market remaining robust overall despite the pandemic, falling demand from overseas citizens and the collapse in tourism revenues could increase the risk of a downward correction into next year warned the Bank of Portugal last week.