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Investment in Housing Will Continue Until 2020

28 March 2018

The Bank of Portugal (BdP) predicts that the investment in housing will remain constant at around 2.8% of GDP until 2020, despite some loss of dynamism due to a maturing market.

The BdP released its report, “Projections for the Portuguese economy: 2018-2020,” revealing that housing investment grew by nearly 6% in 2017, “reflecting the continued access to low-interest financing, the progressive improvement of the labour market, the increase in the rate of return compared to other long-term investments, including lower risk, and an increase in demand by non-residents, while still experiencing the constraints imposed by the high level of household indebtedness.”

For the period under review, the central bank anticipates that housing investments will continue their process of recovery, given the continuation of their primary drivers of growth. “However, there should be some loss of dynamism, reflecting the gradual maturing of growth, which is also expected to extend to housing prices, although they are expected to continue to exceed the increase in consumer prices. Gross fixed capital formation in housing should remain relatively constant at around 2.8% of GDP to the end of 2020,” the BdP forecasts.

“The Portuguese economy will continue to benefit from a favourable economic and financial environment, including robust growth in external demand, around 4%, accommodative monetary policy in the euro area – in a framework of a gradual reduction of the unconventional stimulus of the last years – as well as the maintenance of existing financing conditions by financial institutions.”

Original Story: Diário Imobiliário

Translation: Richard Turner