The Portuguese market is experiencing a difficult time: property prices are rising and inflation is making access to housing difficult for citizens. What should we expect in 2024? Executive Digest conducted consultations with sector heads to understand the forecasts for the next year.
CEO of ERA Portugal Rui Torgal a slowdown is expected in the first half of the year due to caution imposed by the situation, and a recovery in confidence and greater dynamism in the second half.
“We will see tighter risk assessment criteria from banks, especially in the first half of the year. But we are far from a general slowdown and even further from a crisis like the mortgage lending crisis.
I am still waiting a year average price corrections housing sales, which, nevertheless, will continue to grow, but already at a more moderate pace. And, as a consequence of the context, there may be some cooling of demand and increase in average sales time, especially in the 1st half of the year.
Nevertheless, given the stabilisation of inflation during the first six months and the projected decrease of interest rates from the second half of the year, assuming nothing else changes, I expect that transaction volume will remain similar to the 2023 volume“.
RE/MAX Portugal President Manuel Alvarez:
In 2022, the Portuguese real estate market reflected the consequences of international instability, which led to a rise in the prices of raw materials, energy and, ultimately, an increase in inflation and interest rates. On the other hand, supply continued to lag behind demand, so price increases were natural, especially for housing.
However, in 2023 this scenario began to change little by little, which is why we are seeing a drop in prices per square metre in a growing number of municipalities across the country. This has been driven by an increase in the number of licensed homes and completed properties, as well as a slowdown in the prices of construction materials — all of which have a direct impact on supply and, consequently, on price trends. Therefore, what we have been witnessing in recent months is a natural adjustment that will continue in 2024.
The property market outlook for 2024 is positive: forecasts are coming true regarding falling base interest rates, lower inflation and, consequently, an expected increase in the purchasing power of the Portuguese, a slight cooling of demand and greater supply dynamism.However, it is also true that this evolution will not be the same for all municipalities in the country due to the specific realities of each region and the behaviour of the various stakeholders involved.
ZOME CEO Patrícia Santos expects that in the Portuguese property market in 2024 there will be a downturn, which will align with the development of the national and international economy.
Slowing inflation, which is most noticeable in urban areas. Although in the second quarter of 2023, according to INE, the house price index rose by 8.7%, the rate of growth is expected to slow due to the phasing out of fiscal stimulus measures, high interest rates, falling household incomes and restricted access to finance.
Reduction in the number of transactions, mainly due to a shortage of supply. In the first half of 2023, the decline stood at 21.8%: 68,117 homes were sold. This trend is driven by the economic situation, in which a shortage of supply is unable to meet demand, and this scenario is likely to continue.
CEO of Savills Portugal Patricia de Melo e Liège expects the first half of 2024 to be marked by cautious decision-making on the part of investors.
In the luxury residential property market projects in Lisbon point to a resilient scenario in which numerous developments are underway. In this segment, 2024 will record moderate growth of 2%, which reflects a scenario characterised by a supply shortage and buyer liquidity, who are less dependent on credit. Overall the Portuguese real estate market could face with the slowing of price growth due to the impact of inflation on demand.
Imovirtual Brand Manager Silvia BozzoWhat is happening and will continue in 2024 is slowdown, but still a slight increase in prices at the national level. A greater influence on this is exerted by interior areas and regions adjacent to major centres. Despite the possibility of price increases, they still have much more competitive absolute values. In Lisbon and Porto the situation is stabilising.
