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Price of Housing Pushes Families Out of City Centres

5 March 2018

The limitations of the real estate market and the rise in prices in the centre of Portugal’s major cities are forcing out many Portuguese families. The trend, according to Century 21, has come to stay. The real estate agency predicts that prices will, therefore, rise at a faster pace in the outskirts of cities such as Lisbon and Porto.

According to Century 21, “not enough real estate is not being built to meet the demand and purchasing power of the Portuguese.” “There is a clear commitment to developing housing for the upper and lower-middle classes in large cities, which is a response to the needs of a small part of local buyers and international demand,” the company added in a statement. These market trends are pushing families to the outskirts of cities and leading to further increases in prices.

“Young families, who are in the market looking for their first home, are faced with increasing difficulties in finding housing solutions that are suitable to their needs, aspirations and purchasing power,” says Ricardo Sousa, CEO of Century 21 Portugal, who believes that solutions aimed at the purchasing power of middle and lower-middle-class families are needed.

Rehabilitation and new construction will both grow

Rehabilitation and new construction are both expected to be significant trends in 2018. According to Century 21, “both are expected to see a significant increase in the number of residential transactions, given the scarcity of real estate with values adjusted to current demand in those segments.” Such a development could reduce the pressure on prices, especially in existing properties, which would begin to compete directly with new construction. “This will make it more difficult for the owners of existing homes to sell at prices similar to those of rehabilitated or new properties,” the company concluded.

Who are the buyers in Portugal?

Century 21 registered, last year, 10,988 real estate transactions nationally, with an average sales price of 129,000 euros. The company’s turnover surpassed 35 million euros, an increase of 35% compared to the 26 million euros registered in 2016.

In 2017, the agency reported, close to 55% of the Portuguese who bought homes were between 40 and 50 years of age and most sought two- to three-bedroom flats. A quarter of the nearly 11,000 transactions were for less than 100,000 euros while 42% were for between 100,000 and 200,000 euros. Only 26.3% of the buyers acquired properties costing between 200,000 and 500,000 euros, and only 5.3% of the acquisitions were for homes listed for above €500,000.

Foreigners are also a critical factor. International transactions accounted for about 19% of the agency’s total, increasing by 9% to 2,087, compared to 1,923 international sales in the previous year. The principal buyers are French, Brazilian, Chinese, Belgian and English.

Rental market falling

The number of rental operations fell sharply, by around 18% to 2,870 transactions, compared to 3,500 in 2016, “accentuating the downward trend in the rental market that has been observed in previous years,” Century 21 stated.

The real estate agency reported that two-bedroom properties were the most sought type of residence in 2017 and that the average rental value at a national level stood at 598 euros, a 10.7% decrease compared to the national average of 670 euros in 2016.

Original Story: Idealista

Photo: Gabriel Beaudry / Unsplash

Translation: Richard Turner