Buyers are back in the Portuguese housing market with the April rise in demand the highest in the past seven months due mainly to the nation's banks actually writing some mortgage business.
The latest RICS 'Portuguese Housing Market Survey' released today is based on responses from 150 Portuguese real estate companies and concludes that demand will continue to exceed supply.
The increased demand for houses is of course reflected in an increasing sales volume with the pace of growth accelerating throughout April in all regions covered by the survey i.e. Lisbon, Oporto and the Algarve.
The main driver is 'the growth in mortgage lending,' which when coupled with a rising number of transactional should speed up a recovery in volume and price.
The survey predicts that house prices will increase "around 3% over the next 12 months."
The director of the Confidential Property information company, Ricardo Guimarães, said "new loans reached €491 million in March, more than doubling in a year," adding that at the same time, 'spreads' are falling and banks are adopting a more aggressive commercial stance.
But the economist at the Royal Institution of Chartered Surveyors (RICS), Simon Rubinsohn, commented that "consumer confidence remains close to the post-crisis high, despite the acceleration of the economy remaining modest."
Regarding the rental market, "the search for potential tenants continued to grow in April," the fastest pace of growth since October 2011 but as a result of a mismatch between supply and demand, rents increased for the 11th consecutive month and will continue to do so.
The PHMs is a monthly survey conducted in partnership between the Confidential Property and the RICS, for publication of a Trust Index and Expectations in the metropolitan areas of Lisbon, Porto and the Algarve.
At the posh end of the market, Golden Visa investment for May this year was up 16% on April with €96 million spent by non EU nationals, €87 million of it spent on properties over €500,000.
There has yet to be a Golden Visa issued under the new rules introduced by the former deputy prime minister Paulo Portas after Operation Labyrinth saw the arrest of 11 people involved in corruption and self-enrichment by abusing the scheme’s slack administration.
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The survey introduction read as follows:
"The April 2016 RICS/Ci PHMS results point to a further strengthening in sales market activity. This is driving an acceleration in house price growth and pushing confidence higher in the process. In the lettings market, the imbalance between rising occupier demand and falling landlord instructions continues to worsen, with rental expectations increasing as a result.
Starting with the sales market, new buyer enquiries rose at the fastest pace in seven months with Lisbon again recording the strongest pick-up. Meanwhile, instructions to sell increased for the fourth month in succession. Nevertheless, demand has still outstripped supply (in net balance terms) in three of the last four reports. At the same time, sales growth gathered pace during April as each region (Lisbon, Porto and the Algarve) posted a solid increase in transactions. Looking ahead, respondents’ near term sales outlook is turning increasingly upbeat, as expectations improved noticeably over the month.
With activity shifting up a gear, house price inflation is beginning to regain pace. In fact, the past price net balance improved the equal the strongest reading since the survey started in 2010 (previous record set in September 2015). Going forward, respondents are now anticipating headline house price growth of around 3% over the next twelve months.
Further out, contributors expect the pace of growth to accelerate, averaging 4% per annum over the next five years. On the same basis, the Algarve is projected to see the strongest gains of around 4.5% per year while expectations across Porto are a little more modest, at 3.5%.
The national confidence indicator (a composite measure of near term price and sales expectations) rose to +38 from +26 in March. This was the strongest reading since September of last year.
See http://www.rics.org/us/knowledge/market-analysis/ricsci-portuguese-housing-market-survey/
