Bank warns of impending slowdown in Portugal’s property market

A Portuguese bank has warned that the country’s property boom, which has lasted for the past eight years, could be coming to an end.

Novobanco, led by Mark Bourke, has predicted that the current financial and economic climate is also likely to put pressure on private investment.
In its first half year financial report, the bank owned by US fund Lone Star and the Portuguese State, predicts that “private investment is likely to be restricted by an increase in interest rates and high levels of uncertainty”.
On the other hand, the bank expects “a strong expansion in public investment within the context of the Recovery and Resilience Plan.
With housing costs increasingly hitting family pockets, the bank estimates that Portugal’s “real estate market should see a moderate number of transactions and a slowdown in inflation, reflecting more restrictive financial conditions.”
Family consumption “may be penalised by the increase in interest rates and debt servicing that should encourage a decrease in inflation.”
The bank’s economists stress that with “inflation remaining above the 2% target, it is expected that the US Federal Reserve and the European Central Bank will maintain benchmark interest rates high while the Euro Zone admits “at least two additional increases in rates”.
In Europe “growth should benefit from the execution of NextGenEU investment funds, but there are negative risks: “A higher and persistent inflation than expected, forcing additional interest rate increases and favouring a recessionary scenario” is one of them.
“Financially more restrictive and restrictive monetary conditions could lead to a reevaluation of assets, creating financial instability”, the institution warns.