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APEMIP Predicts Slowdown in Real Estate Market in 2019 After Bumper Year

26 March 2019 – Richard D. K. Turner

According to an article in the online business publication Economia Online, the Portuguese Association of Realtors and Real Estate Agents (APEMIP) stated its belief that a slowdown in Portugal’s real estate market will likely begin in the first quarter of 2019. The previous year saw recording breaking growth in both transactions and asset prices. “2018 was a positive year in which the real estate sector in Portugal maintained its upward trajectory. I would prefer that this continue in 2019, but I fear that the number of transactions is already beginning to fall in this quarter due to a lack of supply,” Luis Lima, the president of the association, said in a statement.

According to the executive, many of the assets available on the market are unsuited to the needs of Portuguese families. At the same time, Mr Lima denied the possibility of a speculative bubble in the local real estate market, stating that the problem in the market is essentially an imbalance between supply and demand. After the financial crisis at the beginning of the decade, Portuguese developers were slow to respond to an uptick in demand.  Housing policies by the Portuguese government including a reduction in property taxes and investment incentives such as the golden visa and non-habitual resident programs gave a powerful boost to investor interest in the region. At the same time, foreigners also discovered the attractions of the local climate, cuisine and quality of life.

The need for an increase in housing development

Thus, Mr Lima believes that the market’s current problems can only be addressed by a spate of new building. “The stock of housing for the lower and middle classes must be boosted.” The executive added that the construction industry is currently too focused on the luxury residential segment, which is in turn primarily aimed at international buyers.

Portugal’s statistical agency stated this week that the total number of residential real estate transactions rose by 16.6% last year to a high 178,691. The total value of the transactions last year reached 24.1 billion euros in 2018, 24.4% more than in 2017. The agency’s Housing Price Index (IPHab) registered average asset price growth of 10.3%, in 2018, up from 9.2% in 2017.

Original Story: Economia Online / Lusa