After the euphoria of recent years, the rise in property prices in Portugal is declining and stabilizing. Investment in the residential market is starting to "lose momentum" at a time when demand is weakening and showing signs of slowing down. Lack of supply continues to weigh on prices, but less than before, also because of the upward trend in supply for new construction. With this change of cycle in sight, is it time to think about selling your property in Portugal ?
This article has been translated from Idealista.pt
Portuguese property prices are stabilizing. This is the conclusion of the RICS / CI survey on the Portuguese real estate market carried out by Confidencial Imobiliário and RICS with some 150 real estate professionals. The results show that the residential market is not only cooling, but "it continues to lose momentum, registering in April a slowdown in demand and sales," the statement said. "Despite the lack of supply, to exert some pressure on prices, they are starting to show signs of stabilization."
On the demand side, the survey is betting in April to show a drop in inquiries from potential customers - 7% decline in the number of new consultations and this is already the seventh negative month in a row. "The sales concluded also fell for the second consecutive month at the national level, showing a downward trend in Lisbon and Algarve, but broken down regionally and remaining stable in Porto," the statement said.
Lack of supply no longer pushes prices up
Although supply fell further in April (the indicator reached its lowest level since last December), "price growth has continued to slow down at the national level", resulting in "the most modest growth last four years ". Regionally, survey respondents reported price stabilization in Lisbon and the Algarve, although in Porto they continued to show solid growth.
"Although the growth of the Portuguese economy has gained momentum in the first months of 2019, the housing market seems to be losing momentum," said Simon Rubinsohn, chief economist at RICS, adding that financial access to housing can be felt on demand ".
Ricardo Guimarães, Director of Confidencial Imobiliário, points out that "sellers are revising their expectations down, some already lowering the prices charged by their properties" and "despite the decrease in new loans granted, restrictions on access to credit limit demand. potential ".
And just look at the number of home loans since the entry into force of the recommendations of the Bank of Portugal (BDP) - which wanted to curb loans for the purchase of housing - to confirm this scenario. Between July 2018 and March 2019, the percentage of loans with the highest risk profile was reduced from 35% to 9%, which may have an impact on rising real estate prices.
Is it time to sell your house in Portugal?
The Portuguese property market may be cooling but for the moment it is still hot. A scenario that poses a question to the owners: would it be time to sell his property and seize the opportunity to make a good deal?
Paulo Morgado, director of ERA Portugal, said that "the sale of a home can always mean a good investment strategy, because it is done after weighting and analysis of the real estate market". The expert explained to Vivo Vivo that it was important for the owners to count on a sale with the assurance that the market would slow down.
An opinion shared by Ricardo Sousa, CEO of Century 21 Portugal, for whom the boom of the Portuguese real estate market should not influence the decision. "Selling expensive and buying cheap is the dream of all consumers, but this can only be achieved by those who have the time to wait to sell - by maximizing the value of the sale - and who have a house to sell. live until you find another, "said the manager.
Real estate agencies believe that it is very important to look at the options and correctly assess the risks of each transaction, which completely discourages hasty decisions simply because the market is "hot" and about to enter. in a new cycle. For Remax, "the buy / sell decision should not be taken lightly solely by the influence of the economic situation, but essentially by the expected and prospective future earnings".
The real estate gains tax weighs on the decision
Real estate gains, that is the potential profit subject to an IRS tax of 50%, is one of the most important factors, to which the managers have referred. This means that, after deducting the value of the purchase of the house and the expenses, a 50% reduction of the profit will always be applied.
And there are only two ways to escape this heavy bill: buying a house before 1989 or using capital gains to buy another home within 36 months - which could end up "gnawing" the margin because prices, although on a downward trajectory, remain high.