As a result of strong domestic and international demand, coupled with a shortage of property for sale, house prices in Portugal are expected to increase 9.5% this year, predicts S&P.
If this estimate is correct, Portugal will be the European country with the highest rise in real estate prices among the ten countries that the US rating agency has analysed.
The forecast is contained in the ‘Europe's Housing Market’ report, published on Monday by S&P. The agency looked at real estate price developments in Belgium, France, Germany, Ireland, Italy, the Netherlands, Portugal, Spain, Switzerland and the United Kingdom.
There will be rises in all countries except the UK where prices will remain static this year.
After the expected increase in Portugal this year, prices are expected climb 7% in 2019, 6% in 2020 and 5% in 2021.
In 2017, prices increased 10.5% on top of a 7.7% rise in 2016 but the agency believes that the Portuguese market "remains affordable."
"Limited supply coupled with strong domestic and external demand is fueling house price inflation." Fuelling this demand is "robust economic growth, job creation and low interest rates," as well as falling unemployment and "special incentives" such as the Golden Visa and Non-Habitual Resident schemes.
The Portuguese real estate market should "remain dynamic over the next few years, supported by job creation and increased incomes, as well as by external demand."
The gap between supply and demand also is expected to continue over the next few years. The number of houses under construction is increasing, but is starting from a small base, so it is not keeping pace with the growth in demand.
