Portuguese Look for Homes with Rents of Up to €500/month

14 September 2018

Whether they are paying rent or mortgage instalments, the Portuguese tend to look to spend up to 500 euros per month on housing, one of the main conclusions of the Portuguese Housing Market Observatory, launched by Century 21.

The real estate agency sought to assess the country’s housing needs in detail in the report and concluded that there is a pronounced mismatch between supply and demand. The report shows that homeownership continues to be the preference for the clear majority of Portuguese (89.7%), while 75% want to continue living in the city where they currently reside.

Many want to live in existing apartments (61.2%) that do not require remodelling (60%), with 3 bedrooms (40.9%) and two bathrooms (49.5%), with storage (74.1%) and garage (73.1%), and an area between 91 and 120 square meters (24.1%). The home would ideally be located in peripheral areas of the centre (43%) or even in the central areas of the city (42.2%), with access to parking (82.6%), easy access to public transportation (80.6%), proximity to supermarkets and traditional commerce (80.1%), in a safe area (94.5%).

The average price that the Portuguese are willing to pay is 138,623 euros or less, financed by a mortgage whose monthly instalment would not exceed 500 euros. For people to do take out a loan, the mortgage represents between 10% and 20% of family income for 33.6% of individuals or families. The effort rate is higher for another third, for whom the instalment accounts for 20 to 30% of their monthly income. The effort rate exceeds 30% for 11% of mortgage holders. In Lisbon, the average buyer is willing to pay 166,593 euros for a home, while in Porto that number drops to 137,587 euros.

However, at the national level, the average amount that potential buyers are willing to pay contrasts with the current average sales price of 173,252 euros, a difference of 34,629 euros.

Ricardo Sousa, CEO of Century 21, explains that “the requirements for housing solutions are different, depending on the area of the country, on various levels. However, our analysis of the market at a national level shows very significant imbalances between the supply and demand for housing. The most evident gaps are in the number of rooms, such as the number of houses with more than three bedrooms, where supply exceeds demand by about ten percentage points, or the mismatch between dwellings with two bathrooms – where the supply fails to meet the buyers’ expectations – and other elements. Regarding the locales where Portuguese individuals and families hope to live, the data reveal a shortage of housing in the centre of the cities and a surplus in the suburbs.”

Century 21 also noted that in the case of the rental market, there exists “a significant shortage of housing in the lowest price range.” 51.4% of the supply has rents below 500 euros per month, a deficit of 12.7 pp compared to the demand by 74.1% of the population. There is an oversupply of homes with rents between 801 and 900 euros, which represent 11% of the market, compared to 3% of the population that is seeking this type of housing.

Consequently, for 38% of those who rent their home, as well as those who intend to rent, the average monthly rental costs represent more than 30% of household income, and for another 35.6%, rental payments consume between 20% and 30% of the family’s available budget.

Original Story: Vida Imobiliária – Ana Tavares

Translation: Richard Turner