Property price and rent hikes twice the cost in Portugal than rest of euro area

 In News, Property, Real Estate, Rental market

Portugal’s residential real estate market continues to be buoyant thanks to high demand and lack of supply. Increases in prices have been among the highest in the euro area over the past 12 months. 

The cost of renting too reflects high house prices. In the first quarter of this year while house prices in the euro area contracted 0.9% on the last quarter of 2022, in Portugal they increased by 1.4% on average.
Out of the 20 euro area countries, Portugal came in sixth place among the countries posting the highest price increases on residential housing markets between January and March according to data from Eurostat.
“We are continuing to deal with a chronic lack of houses for sale. This situation has got worse because of construction costs”, says Ricardo Guimarães, the director of magazine Confidencial Imobiliária in May when discussing the results of the Portuguese Housing Market Survey (PHMS) which suggested that developers and estate agents do not see the price of homes falling over the next 12 months.
On the opposite side, however, Luxembourg and Germany saw house prices tumble in the first quarter of 2023 with contractions of 4.5% and 3.1% respectively, topping the list of the eight euro area countries that suffered house price falls for the period.
House prices in Portugal have gained 8.7% on average in Portugal whereas in the euro area the average increase over 12 months was 0.4%
The same trend was seen in 2022 (Portugal: 11.3%/euro area 3%). Over the past five years house prices increased on average 10.2% per annum which an accumulated increase of 58%. In the euro area prices grew at an average of 5.1% per annum which resulted in an overall accumulated increase of 28% valuation on house prices over five years.
As for rents, in the last quarter the data from Eurostat showed that in the euro area rents increased 0.9% on average compared to the last quarter of 2022, but in Portugal they rose by 1.6%.
The main trend was seen over the past 12 months ending in March 2023: rents rose 4.2% in Portugal on average whereas in the euro area they increased by 2.7%.