Homes in Portugal’s Capital Sell for Up to 35% Above Bank Assessment Value

17 July 2018

Homes in the Greater Lisbon area are generally being sold well above their bank assessment values – which serve as a reference for housing loan contracts. In total, this has been the case in 18 municipalities, where sales prices exceed house price valuations by the banks by up to 35%, according to an analysis by Proteste Investe.

The magazine published by DECO – the Consumer Protection Association, concluded that the average price of a two-bedroom home announced online is 35% above the average bank valuation. Three-bedroom homes also overshot their average valuations, in this case by 30%. Running in parallel to this trend is an increase in the number of loan applications for purchasing a home.

Property valuations should serve as an indicator for the sales price, according to Proteste, which says that this has not been the case in recent times – as the real estate market rises at a rapid clip.

“When the Municipal Property Tax Code came into force, there was the expectation that the property assessments for tax purposes would approach 80 to 90% of the market value. However, the cost of housing is now well above the listed price in the land registry or the valuation by certified appraisers,” explains Proteste Investe.

Statistics from the European Union’s Eurostat show that Portugal had the fourth highest increase in housing prices in a year, surpassed only by Hungary (11.6%), Latvia (10.6%) and Bulgaria (8.8%). Houses increased by 7.6% between 2016 and 2017. On average, home prices increased by 3.5% in the euro area and 4.3% in the EU.

In the first quarter of this year, prices soared by an average of 12.2% y-o-y in Portugal, according to the National Statistics Institute (INE).

Original Story: Idealista

Translation: Richard Turner