Race to Purchase Homes Doubles Requests for Energy Certification

25 February 2018

Between 2015 and 2017, the number of certificates issued by the Housing Energy Agency skyrocketed. Urban rehabilitation, the primary motor of the sector, is growing at a faster pace than new construction.

The number of housing energy certificates grew sharply in recent years, buoyed by high levels of demand from the real estate market and elevated property prices, which lure homeowners into selling. Just last year, the Energy Agency (ADENE) issued 30,146 certifications for new construction and rehabilitation, 16,588 more than in 2015. The volume of applications for urban rehabilitation has more than tripled in those two years.

Certificates have been required for the conclusion of purchase and sale agreements, for both existing and new homes, and for property rental since 2009. More than five million households in Portugal still do not have the document. However, with the demand for real estate growing at a pace similar to that of 2008, the number of applications has gained new momentum. “In the last three years we have witnessed sustained growth both in large-scale interventions and in the creation of new buildings in Portugal,” explained Manuel Bóia, the head of the Energy Agency, the governmental entity that has made granted roughly 1.4 million of energy seals in the last ten years.

In 2015, the agency issued 13,558 certificates and just over 20,000 in 2016. Last year, between new builds and rehabilitated properties, another 30,146 certificates were awarded (+50%).

“New construction continues to predominate over rehabilitation. The proportion of growth we see in relation to the issuance of energy certificates for new buildings and rehabilitated buildings has stayed around 80% to 20%,” says the Energy Agency’s head stated in an analysis of the last two years.

In other words, new buildings account for the most significant number of certificates: in 2016, there were 16,000 certificates for new construction, 39% more than a year earlier; and in 2017 there was another 23,646 (+47.8%).

However, rehabilitation certificates, issued whenever a property is subject to an intervention worth more than 25% of its value, are growing at an even faster pace, attesting to the dynamism of this segment of real estate market, especially in large cities. Between 2015 and 2017, they more than tripled.

In 2016, 4,062 energy certificates were issued, an increase of 97.4%, and in 2017 the number of new certifications reached 6,500 rehabilitated homes, 60% more than a year earlier.

In fact, urban rehabilitation has been the lifeline for the construction sector. After a steep decline during the crisis years, the rehabilitation of buildings, especially in Lisbon and Porto, helped create more than twice the number of jobs as in the previous year, 2016. In concrete figures, the number of workers increased from 6,000 to 15,000, according to the Construction Union.

Albano Ribeiro, president of the union, admits that the recent recovery is not enough to entirely make up for old losses: seven years ago, as the construction sector hit bottom, more than 200,000 workers left the country in search of jobs and better wages. And as “75% of the activity is short-term work,” labour shortages already threaten growth.

The construction union also added a warning: 70,000 workers are missing from official registries. They argue that it is fundamental that the federal regulatory regime be tightened to eliminate the informal labour market.

Original Story: Diário de Notícias – Ana Margarida Pinheiro

Translation: Richard Turner