The DBRS anticipates a slowdown in housing prices in Portugal, but warns that limited supply will keep pressure on the real estate market.
Source: Adobe Stock
Author: Redaction
DBRS and market outlook
The DBRS (Dominion Bond Rating Service) anticipates a gradual slowdown in housing prices in Portugal in the coming years, if reduced immigration, high inflation and tighter credit conditions persist. However, market dynamics suggest that housing prices in Portugal will remain under pressure due to supply shortages.
Supply and demand in real estate
The agency highlights that housing prices in Portugal are mainly driven by the imbalance between supply and demand. Insufficient construction and high costs limit the market’s response. Thus, housing prices in Portugal tend to remain high, even with some slowdown in demand. In Portugal, the housing shortage worsens the evolution of housing prices in Portugal.
The DBRS rules out a housing bubble scenario, stressing that growth has not been supported by excessive household debt. The debt-to-disposable income ratio has fallen significantly since the last financial crisis, strengthening sector stability and reducing systemic risk in the housing market.
Structural factors and outlook
Limited available land, labour shortages in construction and slow licensing procedures continue to constrain the real estate market. Tourism and international demand also influence the supply-demand balance, prolonging tensions in the sector and making a rapid price correction more difficult.
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