Risk of ‘Bubble’ in Housing Prices in Historic Areas

29 May 2018

The price per square meter of homes in Portugal has risen in every month since January 2015.

Every month since January 2015 has seen an increase in the average bank valuation of homes. According to data released yesterday by the National Statistical Institute (INE), banking valuations of the price per square meter of homes in Portugal have been rising for 40 straight months. Real estate agents are already speaking of “bubbles in the centres of big cities.”

Luís Lima, the president of the Portuguese Association of Realtors and Real Estate Agents (APEMIP), believes that “there is a lot of demand from people who want to buy in the same areas.” The executive gave examples of some typical neighbourhoods in Porto, such as Rua Escura and Rua dos Caldeireiros, “which foreigners find picturesque. The same thing is happening in Lisbon.”

APEMIP’s president added that “it is not sustainable to manage the real estate market based solely on foreigners’ preferences. Prices cannot skyrocket, and speculation will be the end of us.” Mr Lima believes that increasing the supply of homes at “controlled prices” is a matter of urgency. “People should pay rent of between 250 and 350 euros for a one-bedroom apartment in Lisbon, and the price of a two-bedroom should not exceed 400 to 450 euros.”

Mr Lima believes that there should be only one type of property valuation. “There is the assessment made by the banks for loans, and there is the assessment made by the Tax Office… It’s important to have only one type of valuation in the real estate market that would serve for everything.”

The INE’s figures show that, in comparison with the same period last year, the average value of the banks’ assessments increased by €61 in April. The demand for apartments has sustained the recent appreciation. In effect, the average value of the apartments increased by €6, whereas for houses there was a decrease of €3.

Apartments at 10,000 euros the square meter and rooms at 700 euros

As CM discovered, there is a 16-m2 apartment located in the neighbourhood of Alfama, in Lisbon, that has an asking price of 150,000 euros. “We need to strike a balance,” Mr Lima said, adding that the current prices are unacceptable, as are “room rentals for young students at 600 or 700 euros per month.” “We have to bring additional homes to the market,” he concluded.

Original Story: cmjornal.pt – Miguel Alexandre Ganhão

Translation: Richard Turner