Portugal Real Estate Market Continued to Improve Despite the Pandemic in 2020
2020 has been a chaotic year. Covid-19 took its toll on almost every branch of business. Real estate sectors of countries were not spared from the misery. Yet, Portugal’s real estate market continued its success. The growth rate of the market decelerated. Still, Portugal’s property sector managed to record growth in all three quarters of 2020.
The National Statistics Institute Reports the Latest Trends in Portugal Real Estate
The National Statistics Institute (INE) published the statistics for the third quarter of 2020. The report was published on December 22nd, 2020. The recent information shows the resilience of Portugal’s real estate market despite Covid-19. According to the report, the third quarter of 2020 saw an increase of 7.1% compared to the third quarter of 2019. The same rate for the second quarter was 7.8%. So, the deceleration can be observed between these two quarters.
The Increase in House Price Values Has Slowed Down
The third quarter of 2020 saw a 0.5% increase compared to the second quarter. This rate is the lowest growth rate since 2015. The same rate was measured at 0.8% in the second quarter of 2020. Yet, all things considered, even the slightest growth is impressive. Even during Covid-19, Portugal real estate lures investors.
Still, the Bank of Portugal reads the report as alarming. Portugal thinks of precautions to avoid a further decrease in the rates. The deceleration applies to the entire market. Both secondhand and new houses recorded slight growth in the period. The existing housing prices in the market rose by 0.6% in the third quarter of 2020. New accommodation had an increase of 0.1% in the same period.
The Number of Sales Recovered After the Stagnant Second Quarter of 2020
In the third quarter of 2020, the number of property transactions fell 1.5% against 2019. Yet, compared to the second quarter of 2020, it increased considerably. Portugal implemented extensive precautions against Covid-19 during spring. So, economic activities almost came to a halt. After that period, the third quarter helped Portugal to bounce back. In the third quarter, 45,136 houses were sold in Portugal. It indicates a 35% increase compared to the second quarter.
The report suggests, “There were year-on-year changes of -2.6%, 0.0%, and -1.8%, respectively, in July, August and September”. Also, the number of transactions differed in new and secondhand markets. According to the INE’s report, “While existing homes showed a reduction in the number of transactions, -3.7%, in new homes there was an increase of 11.0%”.
The Value of Transactions Increase Slightly in the Third Quarter of 2020
In 2020, the total value of property transactions reached EUR 6.8 billion. The existing houses in the market constituted 77.7% of these transactions. This ratio is the lowest since 2016. The report by the INE shows the trends more in detail. It writes, “Compared to the same period in 2019, the figures for 2020 represent increases of 4.4% in the case of the total value, and 0.3% and 22.2%, in the value of existing homes and new dwellings, respectively. The most significant year-on-year increase in the value of sales was observed in August by 7.3%, which was followed by September (4.5%) and July (2.1%).”
The Performance Trends of Different Regions Varied in the Third Quarter of 2020
Portugal’s real estate market is mostly fed by the capital Lisbon. The Metropolitan Area of Lisbon and Porto had 60.9% of the transactions in the third quarter of 2020. While it is still the majority, it is the lowest rate since 2015. This data shows that the efforts of the government are effective. Alternative regions throughout Portugal enjoy increased demand.
Alentejo and Madeira recorded increases. They had 3,186 and 864 transactions, respectively. The Algarve region had the same share within the total number. It was responsible for 7.3% of the total transaction. The Azores, however, experienced a slight decrease.