Key residential markets in Portugal are becoming more stable, according to the latest real estate index from the Royal Institution of Chartered Surveyors (RICS) and Confidencial Imobiliario. During July, negative price expectations became less widespread than they were six or 12 months ago in places like Lisbon, Porto and the Algarve. What's more, the sales market headline price was recorded at -37, a figure indicative of falling prices but almost unchanged from the months previous. This suggests price falls are now less widespread.
Meanwhile, the balance of agreed sales has been relatively stable across recent months, with a reading of just -8 recorded for July. This may be contributing to weak letting activity and plummeting rents. The Portuguese property rental market has been stalling over recent months. In July tenant demand firmed, but new landlord instructions fell for the first time since the index began. Previously, the rental market had benefitted from falling sales numbers, but now it is expected that tenants will view the sector as less attractive over the coming months and rents will continue to fall.
In Portugal's most popular regions, Lisbon and the Algarve saw landlord instructions fall, while Porto saw a flat performance. However, over the coming months rents are expected to fall in all three regions, despite overall real estate sentiment improving. Ricardo Guimaraes, spokesman for Confidencial Imobiliario, said: "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." RICS senior economist, Josh Miller, added that while the figures indicate slight stabilisation, "the lettings market is running out of steam".
The Global Property Guide recently noted that market-wide major factors also remain weak. Despite prices rising by 0.2 per cent in Q2 compared to Q1, when adjusted for inflation, values fell 3.4 per cent since June 2012. At the end of the second quarter, the average property in Portugal cost around €948 (£816.11) per square metre. The sharpest decline occurred in the Algarve, with a 5.8 per cent year-on-year drop.
Article by +Danny Bance on behalf of Propertyshowrooms.com