Homes Are Selling Twice as Fast Now Compared to 2014

 

27 August 2017

Foreign demand is a factor in the return of the heady growth in real estate in Portugal

These days selling a house takes an average of seven months. Just three years ago it took twice as long, according to data from Imovirtual

Today, the febrile pace of the Portuguese real estate market is leaving participants flushed, as selling a house now takes, on average, only seven months. Just three years ago it took 14 months for a property to find a new owner. In early 2013, in the wake of the financial crisis, a house was usually on the market for 16 months before changing hands, according to data from Imovirtual data, to which DN/Dinheiro Vivo had access.

“Sales are growing more than 30% a year. There is strong demand – banks are once again lending and interest rates are at record lows and, with the end of austerity, investor confidence has returned,” the real estate agencies believe. In the first six months of 2017, almost 80 thousand houses were sold. The boom has been fuelled by the interest in tourist accommodations and high levels of interest on the part of foreign buyers, principally the French and Brazilians.

Looking at these data, it is not surprising that real estate is selling at a faster pace. For certain types of homes, sales are going even more quickly. At Remax, one of the three major real estate companies to operate in Portugal, two and three-bedroom residences, with prices between 131,716 euros and 169,551 euros, took only 98 days to be sold, according to data in July. That’s just over three months.

The price of homes in mainland Portugal rose 6.2% in the first half of 2017.  In Lisbon, the increase was 24%

Lisbon, Porto and Faro are the cities in which the demand for residential real estate is the highest. But this year, “the best for real estate since 2010”, Setúbal and Braga, which also still offer a good value for money, are attracting increasing amounts of interested buyers. Setúbal is being “invaded” by the French, while Braga benefits from the University of Minho’s technological centre.

Even the rental market is being positively affected by the increased dynamism in real estate transactions. Imovirtual’s Market Index, which gathers the opinion of real estate brokers, consultants and management companies, demonstrates that the time it takes to rent a home is also falling fast, even though in large urban centres it is difficult to find a house to rent at a reasonable price. In March, it took only 2.8 months of market placement to find a new tenant, two months less than in 2014.

High prices are worrying

Strong growth in the market is being accompanied by significant price increases as well, and some real estate companies are already warning of the risks. “Prices are generally expected to grow between 5% and 7% a year in a healthy market, but not by more,” Rafael Ascenso, CEO of Front Door/Christie’s told DN/Dinheiro Vivo.

Those ideal increases are far from those recorded in some areas of the country, such as Greater Lisbon and the Algarve, where house prices rose 15% in the first quarter of the year. In the city of Lisbon alone, the rise was 24.3%; in Cascais, prices rose 18.3% and in Oeiras, 13.6%, Confidencial Imobiliário reported.

But the phenomenon is not limited to the big cities: house prices are growing in 95% of the Portugal’s counties, and the average increase seen was 6.2%. “Until now, the market was asymmetrical, with much greater interest in the historical centres of Lisbon, Porto and the Algarve, driven by international demand and tourism. In 2016, this paradigm began to change, mainly due to the recovery of mortgage credit, which in March of this year reached 720 million euros of new loans granted. That is five times more than in February 2013. The growth of new construction is also boosting the more widespread appreciations,” Ricardo Guimarães, director of Confidencial Imobiliário, stated.

“We are attracting more foreign clients because we have competitive prices, but if prices continue to climb, we lose that competitiveness,” said Rafael Ascenso, who hopes “the market will not continue to grow at the pace of the last two to three years.”

Ricardo Sousa of Century 21 repeats the same call for more competitive prices, because “higher-priced properties remain on the market for longer periods of time.”

Original Story: Diário de Notícias – Ana Margarida Pinheiro

Photo: Pedro Granadeiro / Global Images

Translation: Richard Turner