Increased house prices forecast
Property prices in Portugal are forecast to rise by 9.5% this year, which means that Portugal, along with Ireland, will be the European countries with the sharpest increase in real estate prices.
This is according to a recent report carried out by the American financial ratings agency Standard & Poors (S&P) who analysed the housing market of ten European countries - Belgium, France, Germany, Ireland, Italy, the Netherlands, Portugal, Spain, Switzerland and the United Kingdom.
S&P predicts that only in the UK will house prices remain the same this year, with increases in all other countries up until 2021, Portugal will remain among the countries with the highest increases.
Even though property construction is on the increase here, strong demand – both nationally and internationally – is creating a housing shortage. Prices are expected to surge by 9.5 percent this year, slowing down to 7% in 2019, 6% in 2020 and 5% in 2021. In 2017 prices increased by 10.5% and by 7.7% in 2016.
Regardless of these forecasts, S&P believes that the Portuguese market “remains affordable”, with “a price-earnings ratio still seven percent below the long-term average” and that “limited supply coupled with strong domestic and external demand is fuelling house price inflation”.
Strengthening 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 Scheme and the Non Habitual Residency programme.
S&P expects that Portugal’s economic growth will remain “solid” this year, despite a slowdown compared to 2017, pointing to an increase of 2.3% of GDP.
Therefore the ratings agency concludes that 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”.