Source: Pexels Author: Newsroom According to the regional report on Europe released by the International Monetary Fund (IMF), real house prices in Portugal have doubled since 2015 to date. In addition to Portugal, the IMF also points to the Czech Republic, Hungary, Iceland, Luxembourg and the Netherlands as countries with growing signs of overvaluation in property markets. The report released highlights that since the pandemic, the divergence between house prices and incomes, as well as between house prices and rents, has further increased. According to the IMF, house price-to-income and house price-to-rent ratios in Europe are currently more than 30 per cent above long-term trends. Empirical models indicate that there is an overvaluation of 15-20% in most European countries. This means that while house prices have fallen recently in many markets, living costs and house bank repayments are stretching the balance of household budgets. The IMF also warns of the likelihood that an adverse shock could further deteriorate this situation. The International Monetary Fund (IMF) believes that while impacts on bank balance sheets are generally contained, a major correction in house prices could make the situation bleaker. Rising household debt defaults could lead to a decline in capital under the benchmark, but this would not exceed 100 basis points in most countries. However, a 20% slowdown in the housing market could lead to losses of 100 to 300 basis points, mainly affecting southern and eastern European countries. Such losses could lead to tighter credit standards, increasing the chances and adverse cycles between bank balance sheets, property (and other asset) prices and the real economy.
Source: Pexels Author: Redaction The Smart Cities Observatory once again measured the technological intelligence index of metropolises , in an index covering 141 cities worldwide and based on 15 aspects of daily life, including road congestion, corruption, green spaces and access to housing, among others. In the list of 141 cities assessed, Lisbon occupies the 99th position as the most technologically intelligent city , having fallen a few positions compared to the previous year, when it occupied 81st place in a list of 118 countries, and, according to the institute that promoted the index, this shows to what extent technology allows the different cities to mitigate and solve the problems of their inhabitants, meaning that, in the ranking, Lisbon continues to show signs of vanguard when compared with other nations. The aspects studied fall mainly on concerns related to housing prices , which may or may not be affordable, followed by traffic congestion and, finally, corruption. Smart Cities Observatory president Bruno Lanvin says: The global landscape of smart cities is changing. Cities and their leaders are becoming more visible internationally, and citizens are increasingly demanding and discerning when choosing a city in which to live. The top places in this ranking are mainly Asian and European cities, according to the president of the Smart Cities Observatory, and the first position is currently occupied by Zurich, in Switzerland. Looking for houses in Lisbon ? Take a look at SUPERCASA and continue to follow everything about the real estate market in SUPERCASA Notícias
Source: Pexels Author: Redaction In 2022, according to the most recent data published by INE, the total number of marriages in Portugal was 36,957, the highest value of the last ten years , with an increase of almost 28% compared to that verified in 2021. While it is true that the restrictions imposed by health authorities during the years 2020 and 2021 have conditioned or caused many couples to postpone their decisions, the value registered also corresponds to an increase of 11% compared to that verified in 2019, and the last time such a level had been verified was in 2010, when 39,993 marriage contracts were celebrated. If we consider that the number of marriages is a positive portion in the formula that determines the natural demand for housing, we can consider that, compared to 2021 (29,057) marriages, this phenomenon implied an additional demand of almost 8,000 properties in one year alone. Figures for 2023 continue to show strong growth INE also revealed the number of marriages in 2023, specifically those celebrated in January which reached 1,656 marriage contracts, a (new) increase of 44% compared to the same period in 2022 and more than double that of 2021, with this month (January 2021) being greatly affected by the referred Covid-19 restrictions and, traditionally, a less relevant month when compared to the months of May to September. It should also be noted that, of the marriages registered, 2% were between people of the same sex, a weight that is still much higher than the 0.7% registered in 2011, the first year for which there are records. Consensual union already exceeds 1 million people It is also important to mention the strong growth in the number of people living in a consensual union. Since there is no contractual registration, as in the case of marriages, the values published are the result of the 2021 Census of the population, which indicates the existence, at this time, of close to 1 million people who have unmarried partnerships. This means that, on average, there are 28,000 more people in a de facto union each year, or in other words, that t here are about 14,000 de facto unions per year, a number that is still lower than the 17,500 verified, per year, in the decade from 2001 to 2011, perhaps noting a certain slowdown. However, because year-on-year analysis is not available, caution is needed in interpreting the data. Even so, the conjugation of these two phenomena, in a scenario of a positive migratory balance (entry of immigrants - exit of emigrants) will certainly be contributing to a pressure on the demand for housing in Portuga l, without correspondence on the supply side. Related news: Lisbon with less housing supply and It is increasingly expensive to rent a house in Portugal
Source: Freepik Author: Redaction According to the government, the aim of the new legislation on housing is to respond to the various needs verified by the population, and António Costa spoke to journalists today, after meeting in the Council of Ministers for the approval of this package. The Prime Minister said: housing issues are today a transversal concern in Portuguese society, since they concern all families, and this is a problem that affects everyone, including young people and middle class families. These measures, which have been under discussion for many weeks, were approved and presented today, but will only be published within a month, being subject to public discussion so that they can be approved definitively, some by the Government, others as a draft law to Parliament, in the Council of Ministers on 16 March. There are six dimensions that cover the housing problem, and for each of them, the following measures have been taken: To increase the supply of housing properties To convert the use of properties for commerce or services to housing use To make state properties available on a CDH basis To simplify licensing processes Licensing with a term of responsibility for the designers Interest on late payments for non-compliance with licensing deadlines To increase the number of homes on the rental market To reinforce landlords confidence The State rents to sublet The State guarantees payment after three months of non-compliance , proceeding with collection, support or eviction To increase public supply To apply exemption of capital gains on property sales to the State. To promote affordable rent Financing for municipalities to carry out coercive works Incentives for the transfer of houses in local housing Mandatory lease of vacant houses Tax exemption for affordable rentals To combat speculation End of gold visas Guaranteeing fair rent in new contracts To protect families Exemption of capital gains to amortise mortgages for own and descendants loans In housing credit , apply the obligation for banks to offer a fixed rate and protection in interest rate rises in the value of rents
Source: Pexels Author: Redaction New data from Eurostar now unveils that, since 2018, around 740,000 homes have been sold in Portugal, with only 54,000 having been built. This trend aggravates the lack of available supply for the demand, causing the escalation of prices that, in the last 12 years, will have been above 80%, staying above the European average which is currently at 1,494 euros for purchase per square meter and 6.55 euros for rent. This situation has been more serious in large cities, since, both in Porto and in Lisbon , a two-bedroom property with 70m2 costs, on average, 250 thousand euros to buy and 900 euros to rent, and this is a situation that does not seem to be reversed. The price of houses in the European Union has increased by 49% since 2010, well below the 89% recorded in Portugal, which is ranked 11th country where the increase was greater. These data are mostly justified by the demand of foreign investors, however, it is the lack of supply of houses that creates this problem, since for every ten houses sold, only one was built , since five years ago, making it difficult to access housing.
Source: Pexels Author: Redaction Financial ratings agency Moodys has released an analysis where it makes concrete predictions regarding the Portuguese property market , stressing that there may be a correction in house prices that, so far, exceed intrinsic values . The factors that once caused prices to soar, such as demand from investors, economic growth and low interest rates, are ceasing to exist, which will force a correction in the sector. The agency said in the note released that since 2015, house prices in Portugal have increased by an average of 9.1% per year, one of the fastest growth rates in the European Union and well above the average of the 27, of 5.5%. Continued economic growth, low interest rates and investor demand contributed to this development. Since these phenomena no longer exist today, prices could indeed fall, and the economic slowdown, possible investor disinterest and galloping inflation will be the main culprits. These corrections could be particularly felt by families with mortgages, as under these measures, credit granters have to evaluate the capacity to pay debts at interest rates that are three percentage points above real interest rates, among other things , however, for those looking for a home, it could lead to potential buyers being turned away from credit. However, in Portugal there is minimal dependence on bank loans, which according to Bank of Portugal data, between 2018 and the second quarter of 2022, more than half of the houses were purchased using cash rather than bank loans, which represents greater economic autonomy than in other European countries. More on the real estate sector in The real estate market is still searching for a balance point
Source: Pexels Author: Redaction Buying a house is increasingly difficult for those with limited budgets, with a gradual increase not only in prices per square metre but also in effort rates. In the last three years, buying a 90 sq. m. house has become 25,000 euros more expensive. Respectively, interest rates have also risen, according to the criteria of the 33% DSTI benchmark recommended by the Bank of Portugal. It is in Lisbon and Porto that the difficulty in buying a house of at least 90m2 can be seen, with average prices varying between EUR 375,000 and EUR 250,000, although in the Algarve there are also prices of around EUR 200,000. The national average is 152,159, which is still below what is practised in these regions. Other district capitals, which have university campuses, coastline or greater tourist attractiveness, have variations in the average price, with values between 115,000 euros and 160,000 euros, but the cheapest cities are Guarda , Portalegre and Bragança , where a property of 900m2 does not need more than 10,000 euros to buy. On the other hand, Aveiro , Braga and Setúbal , along with Porto , are the cities with the biggest price increases.
Source: Pexels Author: Redaction Although it is a little known measure, and therefore little used, it is possible to withhold less IRS monthly if you are a worker with a mortgage. This measure is in force since the beginning of the year, date since which you can request the application of this option, and appears in the State Budget 2023. There are conditions of access to this measure, namely a request to the employer entity for the withholding to be made on category A income , in order to suffer a reduction of the rate of the tax bracket immediately below that which corresponds to the monthly remuneration and the situation of the family household applicable to the respective holder of the income. According to the President of the Portuguese Certified Accountants Association (OCC), Paula Franco , this is a measure that seems not to be used much , as it is a recent measure, not very well known and which brings about some fears on the part of taxpayers, namely the fear that they may lose the IRS refund or have to pay more in the annual adjustment, and adds: there is effectively a notion that this [lower monthly tax discount] may lead to the payment of IRS. Were you already aware of this measure? Find out more in New incentives for students to rent or Affordable Rent Programme opened in Lisbon
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
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