Portugal prices to climb 2pc in next 12 months

Property prices are now even rising in Porto  Photo: Danicuki

Portugal prices are forecast to increase 2 per cent over the next 12 months, as the recovery continues across all regions.

The Portuguese property market has enjoyed an increasingly improving outlook in recent months, as sales climb and confidence among agents rises, fuelled by price growth in Porto.

The latest RICS/Ci market report shows house prices continuing to recover in April 2015, as well as transactions.

New buyer enquiries increased once more, extending a run of uninterrupted demand growth stretching back to August 2013. Alongside this, agreed sales rose for the 14th month in a row. Sales rose at a particularly strong rate in the Algarve, with respondents to the RICS/Ci survey expecting growth in sales volumes to "accelerate materially" in the coming months.

Improving market fundamentals continue to support an ongoing
recovery in house prices, which have now reportedly increased
(albeit at a gentle pace) in each of the last four surveys. What’s more, further gains are expected, both in the near term and beyond, with contributors projecting prices to rise by an average of 4.5 per cent per annum over the next five years. In terms of the regional breakdown, 12 month expectations point to growth across all three areas covered in the survey, with the Algarve anticipated to post the strongest gains (around 3 per cent), followed by Lisbon (2.5 per cent), while Porto returned the most modest projections (roughly 1 per cent).

Meanwhile, the national confidence index (a composite measure
of near term price and sales expectations) remains close to the record high posted last time out despite dipping slightly to +33 (previously +38).

In the lettings sector, tenant demand increased slightly while a significant drop off in new instructions from landlords was seen once again. Although rents were little changed during the month, expectations are now pointing to marginal growth in the near term.

Ricardo Guimarães, Director of Ci, comments: "Recent statistics show new mortgage loans increased 20 per cent during the second half of 2014. This is naturally being felt by agents. Their comments suggest this is the main factor changing the market as banks are gradually starting to lend to the sector again."