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Nearly 189,000 Homes Sold in Year to September

18 September 2017

Estimates by APEMIP point to a total of 270,000 to 280,000 homes sold this year, the highest amount since 2010

Prices are appealing to those interested in selling, and easy credit helps those who want to buy: the real estate market is once again heading up and, if trends continue as expected, this year is projected to approach the record for sales set in 2010. Up to September, 189,000 properties sold in Portugal, according to the data ceded to DN/Dinheiro Vivo by the Ministry of Justice. Of these, about 94,000 correspond to housing properties.

The figures are based on property registration certificates, obligatory for each act of purchase and sale, and which inform the Portuguese government of the composition, owner and type of charges (mortgage, lien, etc.) of properties. They combine, therefore, both sales of residential houses as well as land or garages.

“No more than half of this amount will be related to housing,” Luís Lima, president of APEMIP, the association that represents real estate professionals, told DN/Dinheiro Vivo. He also stressed that there had been a steady recovery in the housing market since reached the nadir of the economic crisis, in 2013.

In that year, 176,850 houses were sold, according to the data. That figure was 46.7% less than at its peak in 2010 when many developers and construction companies were failing. The recovery started then and has been consistent. The highest number of post-crisis sales occurred last year, with 258,316 real estate transactions.

This year will be even stronger. Based on the almost 190,000 registrations up to the first week of September, APEMIP estimates finishing 2017 with 270,000 to 280,000 sales. If their estimates are on target, it will be the largest quantity of sales since 2010, when transactions reached an as yet unequalled high of 332,241.

As for housing, Luís Lima has no doubts: “Based on this trend, my estimate point to the sale of 150,000 family homes by the end of the year.”

Few new houses

Up to the third quarter of last year, 191,415 homes were sold in Portugal, slightly up from the current 188,669, which do not yet contain the last three weeks of September. The last comparable value is, therefore, the second quarter of 2017, when 138,249 houses were negotiated in Portugal, up 12,731 from the same period last year. In other words, sales grew by 10% to June.

The figures come with an interesting detail: with the construction of new homes still treading water, second-hand houses are pulling the market forward. Of the almost 189,000 sales, 13.7% related to new properties. The remaining 86.3% were properties that already had an earlier registry, and were, therefore, second-use homes.

It is not surprising, says Manuel Reis Campos, president of AICCOPN, the Construction Association, reporting on the rapid pace of the urban renovation market in Portugal, with many buildings completely remodelled “in which only the façade remains, and the ‘core’ completely gutted.” But since these completely redeveloped buildings already had property registrations, the new flats are counted as second-use. Up to June, the new construction market accounted for 4,400 buildings, “almost double” that of renovation, according to data from AICCOPN.

With regards to sales by region, most residential transactions are taking place in Lisbon and Porto, principally driven by foreign investors and real estate renovations. Lisbon accounts for 38,000 transactions this year, but Porto has been gaining in recognition, 26,640 real estate sales. In addition to these, sales are also significant in the districts of Faro, Leiria, Coimbra and Braga.

“Foreign investment is undergirding the value of sales and the Portuguese account for most volume,” says Luís Lima, noting that “the market for renovated properties is experiencing significant turnover”, with investors buying for eventual resale.

António Menezes Leitão, of the Lisbon Association of Owners (ALP), adds: “There are a lot of people that purchase a property one day and sell it three months later at a profit.” Many of these sales happen in less than three months. For the ALP president, this resale market is fuelling real estate speculation in Portugal and, faced with increasingly attractive deals, “this factors against the traditional rental market,” he told DN / Dinheiro Vivo. “Credit is the big driver of these sales, but what we’re seeing is a real estate bubble.”

Original Story: Diário de Notícias – Ana Margarida Pinheiro

Photo: Gonçalo Villaverde / Global Imagens

Translation: Richard Turner