Foreigners Have Started Looking for Homes Outside Lisbon’s City Centre

26 November 2017

Tourism and the IMI surcharge are inflating market prices. The Cascais metro-line, Sintra and Oeiras are some of the most sought-after places.

343,000 euros was the average price that each foreign national paid for the home they bought in the centre of Lisbon in the last year and a half, according to Confidencial Imobiliário. Faced with this scenario, even international buyers who are looking less expensive homes are fleeing the city. This is according to Ricardo Sousa, CEO of Century 21 in Portugal.

“Houses costing up to 300,000 euros are increasingly sought after, especially in areas outside the centre of Lisbon, such as Cascais, Sintra, Oeiras, Odivelas, Sacavém and Infantado,” Ricardo Sousa explained to Dinheiro Vivo.

In the last 18 months, roughly one in each of the five houses sold in the oldest districts of central Lisbon have gone to international buyers. That is 18% of the 7,300 real estate deals carried out in the period. For property owners and real estate agencies, the data show that the change in the market has come to stay, but more measures are needed to stop the flow of families out of the city.

Century 21’s CEO in Portugal claims that the price of housing in Lisbon “is being inflated by the luxury segment and is highly directed towards tourism.” João Pedro Pereira, of ERA Portugal, corroborates Mr Sousa’s view of the market and compares the situation to metropolises like London, Paris and Barcelona.

After being bought by investors, many houses are converted into local tourist accommodations, a response to the increase in tourists. In response to the dynamic taking hold in the market, António Frias Marques, of the National Association of Property Owners (ANP) argues for “quotas for foreigners buying houses in the city” and “limits to the installation of hotels and local accommodations.”

The problems do not stop here. “This is also a result of the IMI surcharge, which applies mainly to residential properties,” says Luís Menezes Leitão, of the Lisbon Property Owners Association. “There is a high level of distrust in the rental market, mainly due to the conditioning of rents. Property owners will not lease their houses if the situation continues as it is.”

Porto, where the price index for houses in the historic centre increased from 175.7 to 198 points (+13%) in the first half of the year, is also being subject to similar pressures. More and more companies are installing technology centres in the city and pushing the value of real estate upwards.

In Lisbon, to cope with the escalation of prices, the city council signed a joint letter with Barcelona and New York in which the three cities call for more power to regulate housing prices. Housing councillor Paula Marques called for a “profound revision of the urban lease law.” The document argues in favour of the right to housing, defending a balance between tourism and traditional residential market of these three cities. Before such changes, the municipality claims that it can only promote affordable rental programs in the city centre.

Property owners and real estate agents are more ambitious. Luís Menezes Leitão wants the end of the conditional rental regime introduced in January 2015 after the reform of the lease law. Century 21 defends investments in “medium and large-scale rental ventures, with the entrance of investors and a return to new construction,” especially in the segment of houses costing below 250,000 euros.

Original Story: Dinheiro Vivo – Diogo Ferreira Nunes

Photo: Global Imagens

Translation: Richard Turner