If you buy a property in Portugal you can sell it later at a good price? The Portuguese real estate market is overvalued, or it is undervalued? What are the regions where it is worth investing now?
These are the frequent questions asked by our customers
We compiled information that portrays the present situation of the real estate market in Portugal, and the future trends.
Real estate market in Portugal
The beginning of economic crisis
2008 is considered the year of the beginning of economic crisis in Portugal, following the US subprime crisis. Although the real estate market has not grown exponentially, the trend in the 2000s was reversed from that of other European countries. Driven by the Lisbon International Exhibition Expo 1998 and the UEFA European Football Championship 2004, real estate investments have fallen since then and the launch of new projects have been successful to a regular but not intense pace. (Picture 1).
Figure 1. Number of housing licenses in Portugal.
Despite the financial crisis of 2008, we don´t have a situation of excess stock or speculative bubble.
What happens in Portugal? The Portuguese property market has been fully supported in bank credit. In 2008, Portuguese banks have stopped lending money to real estate transactions, and as a result, the volume of transactions fell sharply (Figure 2).
Figure 2. Number of mortgages and real estate transactions in Portugal.
As a result, prices fall, not by any speculative bubble (as occurred in Spain, where prices went up artificially) but because domestic demand suffered a major setback (most Portuguese can not purchase a home without resorting to a loan). Prices continued to fall until 2013 (Figure 3), although less dramatically
Figure 3. Real estate prices evolution in Europe.
Is Portugal a good choice for real estate investment?
The average price per square meter is one of the lowest in Europe, as shown in Figure 4.
Figure 4. real price per m2 of real estate in Europe.
The price decreases due to the financial crisis, which are still taking place, are creating good opportunities for investments. This OECD comparative study (Figure 5) shows that the Portuguese market is undervalued.
Image 5. Overvalued and undervalued property in Europe.
There are now some signs of recovery, encouraged by a renewed confidence in the economy and domestic demand returning slowly.
The economic indicators in late 2013 and the first quarter of 2014 suggest a significant improvement in the real estate market in Portugal. More transactions, prices rising, especially in Lisbon, driven by demand for foreign people (attracted by attractive tax benefits) and local buyers (because of the new mortgage tendencies).
Now is the moment!