Real Estate at a Fever Pitch in 2017: Record Sales and Skyrocketing Prices

29 December 2017

Portugal is among the 17 hottest real estate markets in the world. The data comes from the mid-year Global Property Guide report, which analysed the prices of homes in 45 countries worldwide – in the first quarter of 2017 compared to the same period last year – and proves once again that Portugal has undoubtedly been ‘discovered’ by international investors.

Regardless of whether Portugal is a hot, warm or cold real estate market, there are certain undeniable factors regarding the local real estate market. A great deal of houses sold in 2017 and at higher prices than in previous years. The trend continued throughout the year and is partially sustained, for example, by loosened credit for residential mortgages.

The numbers/data that we have been revealing over the course of the year have been enlightening. In January we learned that the price of houses in mainland Portugal increased by 7.5% in one year (in September 2016 compared to the same month of the previous year), the highest year-on-year increase since 2001.

This was a general trend in 2017, gaining strength month after month. In June, according to data from the National Statistical Institute (INE) for the first quarter of the year, real estate prices increased by 7.9% y-o-y, a record increase since data became available (2009). Between January and March of this year, 35,178 houses were sold, also a record.

The INE revealed, at the end of the year, that house prices soared 10.4% in the third quarter of 2017, compared to the same period last year, a series high. Real estate transactions also surprised on the upside: 38,783 houses were sold between July and September, more than 23% above the same period in 2016.

There is another data point that demonstrates that the real estate market is at a fever pitch, and proves, once again, that the Portuguese people prefer to buy than to rent. Remember the Troika? Well, since their intervention, housing prices have skyrocketed by 25%.

The solution lies in the suburbs

Certainly, in the face of increasing prices, primarily in the large urban centres, many Portuguese are being ‘pushed’ out to the suburbs. The trend is due to the fact that buying a rehabilitated apartment in the capital is 12.3% more expensive than a year ago, according to a study by the consultancy Prime Yield.

Speaking of which, where are the most expensive houses in the country? The prize goes to the counties of Lisbon, Cascais, Loulé and Lagos. “The municipality of Lisbon had the highest price (2,231 euros per m2) and the municipalities of Cascais (1,800 euros per m2), Loulé (1,650 euros per m2) and Lagos 1,555 euros per square meter) all had prices exceeding €1,500,” the INE reported. The Rua do Salitre, in the centre of the Lisbon, is the most expensive street in Portugal.

Is a real estate bubble forming in Portugal? Luís Lima, president of the Portuguese Association of Realtors and Real Estate Agents (APEMIP), argues that while the price of houses is elevated in “some cities”, there is no bubble, nor is one forthcoming. Mr Lima believes, incidentally, that home prices will continue to rise in 2018…

Original Story: Idealista

Translation: Richard Turner