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Home Sales Have a Record Year

17 December 2017

The residential property market has had its best year since 2009, APEMIP revealed. Market growth is being sustained, in large part, by Portuguese nationals using loans and foreigners.

People have been recommending investments in the real estate market for a while now, but now it’s official: 2017 will be the housing market’s best year since it began to be tracked in 2009. The report comes from the Portuguese Association of Realtors and Real Estate Agents (APEMIP), whose conservative scenario estimates a 20% increase compared to 2016, vs a bullish forecast of increases of up to 25%. Either way – whether 152,527 or 158,882 houses are bought and sold, the amount will be the highest since 2009.  That year, both APEMIP and the National Statistics Institute (INE) began to keep track of transactions involving family homes.

“This is going to be the best year since we began maintaining records, with transaction growth expected to come in between 20% and 25% over last year. Our more conservative estimate is due to our awareness that some buyers are postponing signing off on deeds until the beginning of January for fiscal reasons,” Luís Lima, president of APEMIP, explained.

Mr Lima also pointed out that the recovery in the sector is being accompanied by the Portuguese themselves, who have returned in strength to the mortgage market, and by a growing group of foreigners and returning Portuguese emigrants who are seeking a refuge in the country. The country is seen as both a tax sanctuary and as a physical one, with high marks for safety.

“Portugal is fashionable, and it’s not just Lisbon and Porto anymore. It should continue in 2018, unless there is some blunder, creating problems and fiscal bottlenecks,” the president of APEMIP stated.

Real estate revenues throughout the country and local tourist accommodations, mainly in Lisbon and Porto, which have generated income throughout the year, have been a veritable golden goose, but they are not being used in the best way, Mr Lima pointed out. “This money is being used to help the economy at a national level, through tourist fees, IMI and the AIMI, among others. But the funds should be channelled to the real estate sector, in particular through significant tax incentives that stimulate the rental market, homes for young people and in other measures that mitigate the absurd idea that was created in relation to local accommodations.” The president of APEMIP foresees “encouraging results [in 2018], but requiring caution. It’s just that we’re recovering too fast.”

It is an opinion that is shared by Ricardo Sousa, CEO of Century 21 Portugal, who is “worried about the excess of optimism that can be found in the market”, with new projects to be directed essentially to the high and medium-high segment. In his view, “the medium and low medium segments are the engine of the real estate market. Transactions are rising, the results for 2017 are fantastic, and the outlook for 2018 is great, but we have to act now so that new construction will encompass this segment where there is a need that needs to be met.”

€ 700 Million In Loans in Just One Month

Portuguese clients are also a major source of revenue at RE/MAX. Of the approximately €1 billion in homes transacted by the RE/MAX network, only 12% were by foreigners. “It was our best year ever since we set up operations here [2000]. We estimate growth of around 25-30% for 2018, which should be largely based on the increase in the number of agents. This year alone there were over 800 new hires, bringing our total to 6,000 RE/MAX employees. Next year we estimate a similar amount of reinforcement,” Beatriz Rubio, CEO of RE/MAX Portugal emphasised, noting that the REMAX network was one of the franchises that issued the most licenses during the year.

This is also the fourth consecutive year of growth for Era Portugal. João Pedro Pereira, a member of the Executive Committee of Era Portugal, predicts that growth will be repeated in 2018. “Economic growth, reduction of unemployment, higher demand for real estate by households and an increase in the granting of housing loans support our forecasts,” he stated. In October, new housing loans reached €706 million, an increase of 54.8% year-on-year in relation to October 2016.

With the return of euphoria to the real estate market, Natália Nunes, head of Deco’s Over-Indebtedness Support Office (GAS), warns: “It’s never too soon to be reminded that the effort rate, which includes the sum of all the loans – housing, car, consumption – must not exceed 35% of the family’s net income. We are also concerned about variable rate loans that are tied to Euribor, as these may start to rise. “Another situation that requires caution, she warned, is the duration of outstanding loans. “There are people whose housing loans will continue until they are 70/75 years old and, as we know, when people start retiring, their income drops significantly, and this factor should be weighed when contracting bank financing,” Natália Nunes, who is tracking more than 30,000 indebted families, concluded.

Original Story: Expresso – Marisa Antunes / Maribela Freitas

Photo: Tiago Miranda

Translation: Richard Turner