Brussels Increasingly Preoccupied with Residential Housing Market in Portugal

8 February 2019

On Thursday, February 7, 2019, Brussels issued a series of alerts regarding the Portuguese housing market. In the morning, the European Commission (EC) warned that the rise in housing prices would moderate in Portugal, reflecting a gradual recovery in supply, coupled with a slowdown in external demand. Hours later, it added that “we must more closely monitor” the housing market in Portugal, particularly in Lisbon and Porto.

Within the scope of the EC’s winter forecast (2018-2020), released yesterday morning, Brussels stressed that “the recent recovery in residential construction” will have contributed to some moderation in housing price inflation, which subsided to 8.5% in the third quarter of 2018 [year-on-year], “after a peak of 12.2% at the beginning of the year.”

The document, presented by the European Commissioner for Economic and Financial Affairs, Taxation and Customs, Pierre Moscovici, explains how a sudden halt in the demand for homes – whether caused by a slowdown in tourist activity or a fall in the financial capacity of foreigners who have recently been arriving in the country in droves to buy real estate – could be a real danger to the stability of the Portuguese economy and financial system (much as the Bank of Portugal and the IMF have also warned on several occasions in recent months).

Reiterating the concern it has been showing over its last few reports, Brussels believes that the real estate boom of the last few years in Portugal may be nearing its end, noting that housing production continues to “recover,” while warning of a “slowdown in external demand” due to uncertainties in international markets due to Brexit and the faltering Chinese economy.

Original Story: Idealista

Translation: Richard Turner