There is no “housing bubble” but rather a "paradigm shift" in the real estate market

The "O Desafio" conference from 22nd May 2018 / @massimoforte/facebook
The "O Desafio" conference from 22nd May 2018 / @massimoforte/facebook
14 June 2018, Redaction

Around three hundred people accepted the challenge thrown down by Massimo Forte and Gonçalo Nascimento Rodrigues, specialists and independent consultants in mediation and real estate investments, to think about the "Out of the Box" market (referring to the real estate and financial sector opinion blog of the same name).

The Portuguese property market has turned a corner, enjoying good health at the moment. According to the two experts, there is no housing bubble in the Portuguese real estate sector, but rather a new paradigm that must be faced with a capacity to adapt.

How should players in the real estate market adapt to this new reality?

In Portugal, we are currently in a seller's market, where demand outstrips supply. Sale prices in the real estate sector continue to rise and finding property for sale has become a major challenge. Experts and professionals from the sector met to discuss this and other topics on Tuesday 22nd May at the TRYP hotel near Lisbon airport.

According to Massimo Forte, independent consultant specializing in real estate mediation, and Gonçalo Nascimento Rodrigues, independent financial consultant in real estate investments and trainer in real estate finance, who organised the whole conference, there were about 300 people in attendance.

What is the great challenge of the day?

The market is facing a number of challenges, but Massimo Forte decided to highlight one in particular. "One of the great challenges, the one that brings me here, is the professionalisation of the sector," the real estate consultant told idealista/news on the sidelines of the conference. Forte stressed the importance of mediation, saying that it "has to be seen as a serious profession" and not as a last resort.

"Professionalisation implies training, skills and systems, which means that any challenge can be overcome, not in an improvisational way, but in terms of adaptation to the moment and preparation, the same as any other activity," he said.

Are we really moving in that direction? Massimo Forte believes so, taking the opportunity to emphasise the "strong contribution made by US companies to the Portuguese market, in terms of knowledge, training, learning, branding and marketing". Portuguese companies are following this example, and they that know-how is very welcome.

Is there a bubble or not?

Are we living through another period of a real estate bubble or is it a profound alteration of the market paradigm? The answer from the conference was unanimous: the experts consider that we are not facing a scenario similar to that experienced in Spain, for example.

"No, we don't have a bubble. We could have, at most, small bubbles," said Gonçalo Nascimento Rodrigues. The pressure on prices that has been felt in cities like Lisbon and Porto does not justify, for the consultant, the talk of a new property bubble that is in the air.

"It's easy and quite tempting to put the question of a real estate bubble out there because it's an eye-catcher. But anyone who studies this concept knows that it doesn’t exist. If it did exist, it would be very focused and localised. Of course, we have specific areas of Lisbon and Porto where prices have risen greatly, beyond what the average Portuguese citizen can afford because of their income, but it must be understood that price rises are fuelled by foreign demand and is not by debt," he stressed.

Massimo Forte considers this idea to be "fuelled by fear”. "All those who lived through a housing bubble that burst... fear that this may happen again, but in my opinion there must be no fear, there must be the capacity to adapt to the markets."

"I came here today to talk about this very thing, about the ability to adapt when the market changes," said the consultant, who used his speech to explain what tools, methods and processes agents should use to keep earning in a rising real estate market.

The government's measures "are worrying"

The legislative housing package presented by the Portuguese government is giving the experts cause for concern. Both believe that the proposals may restrict the market.

"I consider this to be a matter of great concern," said Massimo Forte, referring to the measures announced. "If these measures make investors pull out, then we will have a serious change in the market." He added that it’s necessary to find solutions to housing problems, but without forgetting the importance of continuing to attract foreign and domestic investment.

"I have noticed with apprehension these possible changes which are on the table, in particular the short-term tourist let sector (Alojamento Local), which can make this investment disappear suddenly," he concluded.

"What the Portuguese legislative branch is doing is completely wrong and inadequate for what we want for the market," argued Gonçalo Nascimento Rodrigues.

"If we want to talk about the rental market, for example, we have to start from the principle that there is no rental market. It’s not worth saying that the rental market works because it does not exist. We are stressing the wrong point."

"The problem is the lack of supply. It is necessary to reflect on why there is no offer. Without investors there is no rental market and there are fewer and fewer interested investors. There is historical protectionism for tenants, instead of support programs to help tenants pay their rent. We need to increase supply and subsidise tenants if we are to have a balanced rental market,” he concluded.

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