BPI predicts 1.5% house price correction

 In House prices, Interest rates, News, Original, Property

Analysts at bank BPI says that despite the Portuguese housing market showing a high level of resilience, there may be a housing market price correction of 1.5% in 2023.

For 2022 overall, BPI Research estimates that property prices may continue to rise at a rate of 11.7%. In a note sent on Friday to bank clients, the analysts highlighted six variables that have contributed decisively to the increase in prices:

An extended period of cheap mortgage credit with low interest rates;
Low unemployment;
Lack of new build offer;
Growing demand;
Increase in construction costs;
Purchase of properties for investment.

However, BPI says the context has changed, particularly in the third quarter of the year. “With the impact of inflation on family budgets and with an inversion of monetary policy by the ECB (the start of interest rate rises), with a resulting stabilisation of house prices at the end of the year. Next year there will be a 1.5% ‘correction’ in house prices.
The housing market will cool as financial conditions become tighter and interest rates increase more rapidly than had previously been expected.
Which is why the BPI Research analysts expect a “slight correction” of 1.5% in the prices of houses, but in practice it will be a “sudden brake after nine years of an average 8% year-on-year
In a report released by Oxford Economics in November, and based on 41 countries (including Portugal), its specialists expect almost all countries to suffer a contraction in their housing markets in 2023 with almost half seeing a fall in house prices. The last time this occurred was in 2009.