Portugal’s real estate prices continue to rise, fuelled by surging demand as well as improved economic conditions. Property prices in Portugal rose by 7.92% during the year to the third quarter of 2019, up from y-o-y increases of 7.38% in the second quarter of 2019, 5.96% in the first quarter of 2019, 5.39% in the fourth quarter of 2018, and 4.7% in the third quarter of 2018. In fact, it was the highest growth in more than a decade. House prices increased by 2.47% q-o-q in the third quarter of 2019.
All regions of Portugal have experienced significant house price falls during the last decade. And despite some recovery in 2009, real estate prices started to fall again in the last quarter of 2010. Prices only began to recover in the fourth quarter of 2014, after 13 consecutive quarters of y-o-y house price declines.
Demand and supply are surging. In 2018, the total number of housing transactions in Portugal rose strongly by 16.6% to 178,691 units from a year earlier, according to the Instituto Nacional de Estatistica. Likewise, the value of transactions surged 24.4% y-o-y to €24.06 billion (US$26.81 billion) over the same period. Clearly the new wealth tax introduced in 2017, applicable to higher-valued properties, has in fact had a negligible impact on the luxury housing market.
In the first three quarters of 2019, the number of licensed dwelling permits in Portugal soared by more than 19% to 17,558 units from a year earlier, after rising by about 40% in 2018.
The Portuguese real estate market is expected to remain buoyant this year, with Moody’s Investors Service predicting house price increases of between 7% and 8% every year until 2020.
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