More houses and cheaper. In the end, though, where are these houses? Nowhere. The Portuguese real estate market is in the middle of a drama: there is a lot of demand and little supply at affordable prices. The few houses that are reaching the market have been renovated and in most cases are destined for foreign buyers and at prices that Portuguese people cannot pay. What to do? More help is needed in terms of urban regeneration and, of course, new constructions.
‘Imbalance’ would be the word that best defines what the Portuguese property market is going through, according to the Association of Portuguese Real Estate Professionals and Businesses (Associação dos Profissionais e Empresas de Mediação Imobiliária de Portugal or APEMIP). The most recent data doesn’t lie: around 80% of houses are sold in under six months and the stock of houses to rent is used up in three months.
Property prices are rising in every neighbourhood in Oporto and Lisbon and even on the outskirts of the capital like Loures, Odivelas and Amadora, where a one-bed flat can cost up to 150,000 euro, according to the data supplied by the National Statistics Institute (Instituto Nacional de Estatística or INE). The Portuguese are faced with a dilemma: they want to buy and rent houses, but really, they just can’t.
New constructions – the answer to the problem?
“The return of new constructions is starting to seem inevitable. Otherwise, the residential problems will only become more pronounced,” states the president of the APEMIP, Luís Lima.
“By building new homes, families will find they have more possibilities, real estate agencies will have more products to sell and be able to supply the needs of their customers, the banks will guarantee dividends through financing and mortgages, builders will create more employment and the property market itself will lower the prices and answer all the housing needs,” adds the president.
The Portuguese Association of Real Estate Developers and Investors (Associação Portuguesa de Promotores e Investidores Imobiliários or APPII) assures that its members are aware of this problem and are already preparing the land in this sense. “Putting more supply on the market at affordable prices for middle class people will help to stabilise the hike in property prices,” says our source in the Association. “If we want to be sustainable in the long term, we must create a balanced market which is attractive for foreign buyers but also accessible for Portuguese people.”
The APPII admits that more aid is necessary, like that which already exists for urban regeneration. “It’s really important to start to incentivise – with tax allowances and other types of positive discrimination – new constructions, just like they do with urban regeneration, as this is crucial to stimulate construction outside of town centres, directed at the middle class and young people,” the same source points out.
This argument reinforces the position held by Luís Lima. For the representative of the middlemen, it cannot be the developers, investors and owners of the properties who take on the role of guaranteeing reasonably-priced housing. “If, in the current outlook, owners don’t see the rental market to be in optimal conditions for them to bet on, it’s natural that they will direct their activities towards other markets,” he concludes.