Within hours of hearing the central bank warning of the threats of “euphoria” in the Portugal’s real estate market, the chairpersons of Portugal’s major banks were united in stating that Portugal was not experiencing a bubble in the real estate market.
Speaking in unison at a Lisbon conference this week, bankers described the steeply rising house prices as a normal consequence of the market correcting itself following years of minimal investment. The executive president of Portugal’s largest private bank, BCP, added that banks have increased their lending, which has assisted in corrections of what were previously stagnant house prices.
“The housing market has warmed up”, explained Miguel Maya, adding that locations such as Lisbon and Porto are not only performing well among domestic buyers, but also through foreign investment. Novo Banco chairman António Ramalho substantiated these comments by adding that investment was also limited through the lack of building licences being issued. BPI chief Pablo Forero recalled the housing bubble in Spain, and said that the situation “in Portugal is very reasonable”.
These comments came after the European Banking Authority raised the issue of penalising banks with a bad debt ratio in excess of five percent of credit issued. The European average currently stands at 4.64 percent, while in Portugal this number is almost three times higher at 12.41 percent.
You can read the full article here.