A new report from the Royal Institute of Chartered Surveyors (RICS) has revealed that the Portuguese property market was one of the least affected within the European Union during the economic crisis.
The report has been welcomed with fresh optimism that the property landscape within Portugal may be changing for the better with property values beginning to show signs of increasing at sustainable levels of growth.
Despite the fact that Portugal's property market was one of the least affected in the EU, real estate values still plummeted significantly with forecasts remaining subdued for some time. However, the new report suggests that prices are now increasing slowly and gathering momentum.
The RICS' Portuguese Housing Market Survey is particularly optimistic about new construction rather than property re-sales. Prices of newly constructed homes have shown to be steadily rising over the first half of 2014. However, with regard to re-sales, just the region of Algarve has experienced positive increases in housing prices, with prices in Porto moving in the opposite direction. The RICS warn in their report that this contradiction across regions will add more volatility to month-on-month data which may reduce its accuracy.
The report also details a gradual and steady increase in buyer interest and property sales since the beginning of 2014. While sales forecasts remain positive, house prices are widely expected to increase, the first time a positive price expectation figure has been recorded since the property bubble burst in 2010, according to the National Confidence Index.
However, there is a downward trend in rents which may have a drag effect on Portugal's property prices. Supply continues to outstrip demand for rental properties which has brought down rental values significantly. Experts have suggested that the downward trend in rents could be attributed to a discrepancy between the type of housing option supplied within the market and those in demand. Affordability has also been suggested as another contributory factor.
Portugal's 'Golden Visa' scheme launched in 2012 has attracted significant investment from non-EU citizens looking to diversify their portfolios outside their own countries. As soon as the scheme was announced the prices of luxury properties also rose, mainly due to the requirement for a property purchase in excess of €500,000 in order to qualify for residency.
Since October 2012, the Portuguese government has issued approximately 1000 Golden Visas resulting in a total foreign investment of €556m, according to the statistics from SEF. Over 80% of residencies issued have been to Chinese nationals with other visa nationalities coming from Russia, South Africa and Brazil.
The increase in transactions as a result of the Golden Visa scheme has helped to underpin the recovery of Portugal's property market and as investor interest increases, so does optimism for further growth in the sector.