Portuguese prices forecast to keep climbing

Photo: Chris Yunker

Portuguese property prices are predicted to keep on climbing over the coming years. The country's housing market has enjoyed steady growth in both sales and values in the last year and the latest RICS Ci Portuguese Housing Market Survey paints an upbeat picture for the future.

Buyer demand picked up slightly in January 2016, following a broadly flat  December. Lisbon and the Algarve both enjoyed a rise in new buyer enquiries, despite a dip month-on-month in Porto.

The national sales indicator suggests sales volumes were more or less unchanged for the second month in a row, but estate agents did see a modest rise in transactions during January, despite a slight drop in sales among developers.

The findings echo a dip in enquiries for Portuguese property on TheMoveChannel.com at the start of 2016, but demand overall has risen considerably in the last 12 months. In Q4 2015 alone, enquiries for Portuguese property increased 26 per cent compared to Q3 2015, as a combination of capital growth and lifestyle appeal, not to mention a broadly favourable currency exchange rate, all fuelled interest.

Investors thinking in the long-term are still set to reap the benefits of the country's gradual recovery, with house prices predicted by RICS and Ci to rise at a steady pace in the future.

Looking ahead, the survey's respondents expect house price inflation to come in around 2.5 per cent in both Lisbon and the Algarve over the coming year and around 1 per cent in Porto. Over the coming five years, meanwhile, prices are forecast to grow by a stronger 4 per cent per annum.

The optimism is highlighted by a confidence index rating of +30, the fourth month in a row where confidence has been in the narrow positive range of +30 to +33.

For investors seeking short-term profits, the report also highlights further growth on the cards, with rents now up for nine months in a row, following years of decline. Going forward, strong tenant demand is expected to push up rents even higher during the next three months.

RICS Chief Economist Simon Rubinsohn comments: "Portugal’s economic recovery gained a little momentum in 2015, with GDP growth picking up to 1.4 per cent from 0.9 per cent previously. If 2016 is to bring continued housing market improvement, economic fundamentals will be key."

Ricardo Guimarães, Director of Ci, says that there is concern among estate agents that wider political and economic conditions may negatively impact the Portuguese market, but that agents overall believe there is "huge potential" for international investors and tourist demand to drive the market."