Portuguese property market starting to stabilise

The RICS/Ci housing market survey found that sales market conditions remain stable, while negative price expectations are becoming less widespread.

Prices in the sales market are still falling, with the headline balance for July recorded at -37, but the figure is “almost unchanged” from the previous two months.

The balance of agreed sales also looks quite stable across recent months, adds the report. July’s figure is recorded at -8, another negative figure but confidence appears to be improving nonetheless. Indeed, the RICS/Ci confidence index climbed to its least negative value since September 2010. Price expectations are also on the up, climbing to their least negative readings since the survey began.

“Least negative” is hardly a glowing measure of success, but the gradually improving data suggests a stabilisation of conditions, reinforcing the impression of a less negative market dynamic than was the case six or twelve months ago.

In previous months, any slip in the sales market has seen a positive period in the lettings sector as buyers struggle to afford to buy property. This month, though, that upturn was none experienced, prompting the report to speculate that activity in the rental market may be running out of steam.

“Tenant demand firmed a touch, but new landlord instructions actually fell for the first time since the series began,” adds the report.

Rental values have declined steadily over recent years. With expectations set for further decreases, that may be the cause of the lettings sector’s fall in appeal and activity. Indeed, landlord instructions are now falling in Lisbon and the Algarve, while they are flat in Porto. Rents are expected to fall across all three regions.

RICS Senior Economist Josh Miller says: “The July survey results point to further very tentative signs of a trend towards stabilisation in the sales market, although the lettings market is running out of steam, with new landlord instructions now falling alongside rents.”

CI Spokesman Ricardo Guimaraes adds: “July was a period of high uncertainty, thanks to the instability of the Government coalition. After a relative improvement in sentiment during the past few months, agents are hoping the latest political setbacks won’t hit confidence in the market.”