This morning INE released data from its usual survey on the Bank Valuation of Housing, i.e. the property valuation values used by banks when granting credit for house purchase. The most immediate conclusion is that, on a national level, the median value per square metre for the month of February fell around 0.5% to 1,478 euros. However, in year-on-year terms, the same indicator corresponds to an annual increase of 12.5%, or even, if we compare it to February 2021, to an increase of more than 25%.
o mais imediata é a de que, a nível nacional, o valor mediano por m2 referente ao mês de fevereiro, caiu cerca de 0,5% para 1.478€. No entanto, em termos homólogos o mesmo indicador corresponde a um aumento de anual de 12,5% ou ainda, se compararmos com Fevereiro de 2021, a uma subida superior a 25%.
Algarve and municipalities on the outskirts of Lisbon and Porto continue to rise
In fact, on a more detailed analysis of the figures published by INE we can see that, despite a slight slowdown in the increase in valuation values, and inherently in transaction prices, the market continues to show signs of dynamism, with some regions in the Algarve and the outskirts of major cities showing consistent and strong rises, especially those located on the coast.
This is the case, for example, in the municipalities of
Alenquer,
Almada,
Torres Vedras,
Sintra,
Paços de Ferreira,
Matosinhos and
Faro, where the median values per m2 assessed by the commercial banks continued to rise in relation to the previous month and have already accumulated valuations in twelve months close to 20%.
Municipalities such as
Cascais showed a slight correction but continue to show strong dynamism, with valuations close to 20% in the last 12 months.
Lisbon performed similarly to the national figures, but it was in the city of
Porto that the correction in February was most evident (-3.4%) despite the fact that, in accumulated terms, it continued to show a stronger increase than that seen in the capital.
Demand for bank financing shows sharp drop
According to the INE's methodological note, the survey collects information on residential properties (houses and flats) which, as they are the object of a bank loan application by the purchaser, have an underlying technical and market valuation by expert appraisers.
As such, it is obviously important to analyse the number of valuations carried out in order to calculate the median value of the bank valuation for February 2023. In this regard, the INE report indicates that the number of appraisals made in February of this year fell by about 8% compared to the previous month, totalling 20,311 appraisals. This number represents not only a drop of over 29.2% compared to February 22, but also a decrease of almost 39% compared to May 2022, when the maximum value of the INE data series was registered.
Cash buyers may be on the increase
Judging by the sharp reduction in the number of appraisals requested by banks, the demand for housing credit by clients may have actually decreased, mainly due to the rise in interest rates. However, the same data shows that this strong decrease in demand did not correspond to a general decrease in the median values of bank appraisals for housing credit purposes.
In other words, despite the strong retraction in the implicit demand for mortgage loans, banks continue to increase median appraisal values in the main cities other than Lisbon or Oporto, thus reflecting the conditions and prospects of the market which, inherently, may therefore be being animated by more buyers who do not resort to financing.
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