Source: Pexels Author: Redaction According to data released this Friday, December 23, by the National Statistics Institute (INE), there was a 13.1% increase in the Housing Price Index (HPPI) in the third quarter of 2022, with an increase in prices of existing homes set at 14.7%, compared to the increase in the value of new homes, which stood at 8.4%. In the data provided by the document released by INE one can read that in relation to the previous quarter, the IPHab increased 2.9% (3.1% in the 2nd quarter of 2022). In the category of new housing, the rate of change was 4.0%, 1.4 p.p. above the increase in prices of existing housing (2.6%) . These numbers show that, despite the low supply of housing, demand continues to rise, creating imbalances in the market that lead to price increases and the average annual rate of change in house prices has effectively reached a new historic maximum and INEs statistical bulletin also explains that between July and September 2022, the value of houses sold increased by 9.6% compared to the same period in 2021. In this period, rates of variation above the national average were observed in the Autonomous Region of Madeira (60.3%), in the Autonomous Region of the Azores (26.5%), in the Alentejo (10.4%), in the Metropolitan Area of Lisbon (10.3%) and in the Centre (10.0%) . On the other hand, there were less expressive increases in the Algarve and North regions, where the rates of change were 3.1% and 6.7% respectively. More news about the real estate market in Property tax benefits attract new investments
Source: Pexels Author: Redaction It is possible to ascertain, according to the data gathered throughout the year, that house prices may stabilise in 2023, despite the fact that increases are also estimated in areas where demand is starting to increase, due to the difficulty in acquiring property in the big cities. A drop in prices is ruled out, but in short there could be an oscillation of values. According to the Association of Real Estate Professionals and Companies of Portugal (APEMIP) , on analysing the various segments of the market, it is possible to conclude that it is the areas whose valuation has increased in recent years that may suffer this stabilisation in prices, even if it is not very significant, contrary to what may be registered on the outskirts of the cities, where an upward trend is predicted. The President of APEMIP, Paulo Caiado, states: predictably we are going to see a rise in prices in counties that until now were not so pressured , however, due to the high prices of rents, there may continue to be a demand in the purchase of property, something that may imply changes in the numbers of housing transactions. Follow more sector updates in Real Estate tax benefits attracting new investments and Sustainable and environmentally friendly architecture
Source: Pexels Author: Redaction It is as a result of the tax exemption and tax benefits applied in the real estate sector that, per year, around two billion euros are invested in the Portuguese market. This reality contributes to the attractiveness of new investments , especially those of large capital, by foreign banks and pension funds. Despite being a positive sign for the sector, the investment that comes in the wake of the low taxes applied, favours an unadjusted allocation of capital, which could be applied in other economic sectors at a national level. According to calculations made by Susana Peralta, a professor at Nova SBE , this data on real estate transactions became known, which allows the conclusion that real estate investment made in Portugal takes into account, above all, the great tax advantage over the profitability of businesses, which exceeds 2,000 million euros, and even so is considered by the researcher, an extremely conservative value. The professor also states: We must have a much wider and transparent public debate about tax benefits , claiming that in our country there is insufficient information about who does or does not benefit from these tax rules, reiterating that (...) there should be transparency about the houses that are built, the price per square meter and the income decile to which they are destined. Follow more news in SUPERCASA Notícias or in Property Market fed by foreigners
Source: Pexels Author: Redaction In October, according to ECB (European Central Bank) data, house prices were expected to rise by 3% over the next 12 months, compared to the previous months expected rise of 3.4%, something that anticipates the slowdown trend in the housing market and reflects less optimism. Consumers also expect an increase in interest rates pointed to 4.7% in 2023, which is equivalent to an increase of 1.4% compared to the beginning of 2022. As for home loans, there has been an increase in applications in the last three months, which will have been 13.9% in October, and the ECB comments: Both consumers perception of access to credit in the last 12 months and expectations of access to credit in the next 12 months have decreased significantly. The dynamics of the housing market have shown weakness in mortgage rates, something that in September will have resulted in the European Central Bank estimating a decrease of up to 9% in house prices for the next two years, following the increase in interest rates on home loans. This slowdown has already been confirmed by several institutions, including the IMF (International Monetary Fund) , which hints that overall the housing market is experiencing a tipping point, and explains: As central banks around the world tighten monetary policy to address price pressures, rising borrowing costs and tighter [lending] criteria, together with high house valuations, could lead to a sharp decline in house prices. Read more in Advantages of renegotiating home loans
Source: Pexels Author: Redaction It is already common knowledge, the difficulty that young people currently have in buying a house, something that, according to the study of the Calouste Gulbenkian Foundation published two years ago, results from the increase in the difficulty in accessing housing in Portugal, with the rise in values affecting 73% of families in Portugal, in the year 2011. But this scenario continues to be equally current, with rising house prices and also a change in personal preferences, as people end up studying later, choosing to travel, defining other priorities, all factors that end up having an impact on the financial capacity shown by those looking for a home of their own. The Bank of Portugal confirms this trend, by divulging the registry of the volume of concessions of new housing credit that, for young people up to the age of 35, is only 10%. This is a very low proportion, but its explained by the increase in house prices, allied to low salaries, which are no longer enough to cover the total costs. One of the consequences of this reality is the departure of young people abroad, pushed by the difficulty in finding their own homes. However, theres also a tendency for a large part of young people to end up resigning and continuing to live with their parents - something that has been recurrent in Portugal, which has already been confirmed as the European Union country where young people leave their parents house later - on average, at the age of 33.6. Was this news of interest to you? Read more in SUPERCASA Notícias
Source: Pexels Author: Redaction For those with contracts indexed to Euribor , there will be increases in mortgage instalments during December, with terms of up to three, six or twelve months. If you are paying off a debt , for example, of 150,000 euros over 30 years, with a contract indexed to Euribor at six months, with a bank profit margin of 1%, you will have to pay 658.67 euros more. This is a substantial increase, of 186.07€, compared to the last review carried out in June, which at the time had only had an increase of 170.83€ for those who had their contract reviewed last November. If, under the same conditions, you have a loan indexed to Euribor for three months, you will now pay 618.34 euros, which translates into an increase of 108.18 euros. In the case of loans indexed to 12-month Eurobor, under similar conditions to those mentioned in the previous cases, in December you will pay 701.33 euros, which represents a 251.69 euros increase in the value of the loan compared with what you have been paying since December of the same year. These developments are closely linked to the fluctuations in key BCE interest rates, which have already increased three times since July. Follow more news in Forecasts estimate a slowdown in the inflation rate in the Eurozone and Mortgage loans: The new rules
Source: Pexels Author: Redaction The price of houses has increased steadily, making the major cities of Portugal , areas of housing inaccessibility. In Lisbon the values exceed the national average , and according to a study created by the Faculty of Architecture of Lisbon, the northern zone of the capital is where the values of the houses reach the maximum records. Lisbon, Cascais and Oeiras are the three municipalities where prices are highest, creating housing inaccessibility, given that in these municipalities, not even the highest income bracket (>32.500Euro/year) households have the possibility of finding adequate housing available without spending more than 40% of their income , the study mentions. In contrast, Vila Franca de Xira, Alcochete, Barreiro, Palmela, Seixal, Sesimbra and Setúbal , are the areas where the percentages are lower, as a result of more affordable prices compared to the northern Lisbon area. Although the values are constantly rising throughout the metropolitan area of Lisbon , the study managed to position by zones and values, where the values of the houses really stand out. In short, it was found that around two thirds of households in Lisbon cannot access housing in the current market without using more than 40% of their income. Follow more in: Lisbon: Rehabilitation of 200 homes and Opportunities of the month in Loulé, Aveiro and Coimbra
Source: Freepik Author: Redaction The year 2022 has not been a truce for the budget of families, who are increasingly struggling to meet their financial commitments, while they see their purchasing power drastically reduced. The rise in prices and the cost of living through the increase in inflation, whose growing and systematic evolution the European Central Bank (ECB) seeks to contain through the increase of reference rates, especially the Euribor rate, has caused apprehension and some incredulity on the part of specialists who consider that in this way, families are being punished on two fronts: in the loss of effective net income, together with the increase in the value of their fixed monthly expenses. But there is no point in ignoring a reality that is here to stay and that will continue to be fed by the conflict in Ukraine, with its consequences on a world economy that is already weak and trying to recover from the strong impact caused by the pandemic, with long-term consequences that are yet to be determined. In the midst of this economic turmoil are families trying at all costs to meet their responsibilities. If for the ECB the measures taken during this second semester are aimed at containing the harmful consequences that an uncontrolled rise in inflation would have on the world economy, for families it is a daily struggle to ensure their own future. The OECD believes that interest rates will reach 4% already in 2023. If this happens, mortgage payments will rise brutally, and Euribor rates may reach the 5% level, as has already happened in the past. In this sense, Christine Lagarde, president of the ECB, continues to defend what she considers to be its main mission, which is written into the European treaties and which involves guaranteeing price stability. With this measure, Lagarde argues that her objective is in no way to limit or reduce economic growth, but it is imperative to bring inflation down from the current almost 9% to 2%. In view of the objective outlined and assumed, everyones expectation is only on how much interest rates will rise, with the Organisation for Economic Cooperation and Development (OECD) already defending a forecast, at this time, of a rise in rates up to 4% as early as 2023: in the euro area, the ECB faces a challenging environment, given the prospects in the face of increasingly widespread inflationary pressures. Rates at 4% only twice since 1999 If the OECD scenario comes true, it will be only the third time since 1999 that the ECB has set interest rates at the 4% level. The first was in 2000, at a time when the ECB began raising its main key rate a year earlier, from 2.5% to 3%, and in October 2000 rates reached 4.75%, remaining above 4% until September 2001.
Source: Pexels Author: Redaction The month of November brings another season of IMI payments. IMI - Municipal Property Tax - is a tax stipulated through the value of the property, which may be variable by each municipality, and its payment is also provided for according to the value. For IMI of less than 100 euros , payment is made in full, once only, but if it is more than 500 euros, there is the option to divide it up over three months. For amounts between €100 and €500 , the option is to pay in two instalments. In November you can pay the 2nd instalment of IMI between €100 and €500 and the 3rd instalment of IMI over €500. In the event of non-payment, a debt certificate is issued, which may accrue late payment interest and may be paid at any time. Read more in: Family IMI, what is it? and IMI: Consequences of non-payment.
Source: Pexels Author: Redaction According to the Bank of Portugal, the average interest rate on new loans has not been this high since October 2015. On Thursday, 3 November, it reached 2.23 percent (0.22 percent more than in August), which is a record high for the last seven years. In a statement, the banking entity released data relating to loans granted in the month of September, obtaining a total of 2,006 million euros for individuals, figures higher than the previous month. In terms of loans other than those for home loans, the figure stood at around 467 million euros, broken down into 1,338 million in home loans granted, 467 million in consumer credit (granted) and 201 million in loans for other purposes. Around 87% of home loans granted were indexed to 6 or 12 month Euribor rates. In short, September was the month with the highest figures , both in terms of amount and number of loans granted.
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