The current pandemic has turned the property market on its head, but despite some uncertainties, there is still some optimism. These are the 6 trends defining Portuguese real estate for the rest of a very unusual year.
Doutor Finanças, a company specialising in financial and family finances, spoke to experts from the real estate sector and outlined the key tendencies for the second half of 2020. These are the trends buyers (and sellers) should be aware of:
- Property prices haven’t dropped
Despite the expectations of many potential buyers (and also sellers), house prices in the first half of the year didn’t see the price drop that was expected (see here). On the other hand, rent costs have come down, but that isn’t expected to continue.
- Rents have come down, but for limited time
The crisis that the pandemic caused in the tourism segment saw a higher number of properties come onto the long-term rental market, resulting in a drop in rental costs. However, the predictions are that this reality will end before the crisis does.
- Interest rate stays down
It is expected that interest rates remain low in the second half of the year. This is because the European Central Bank doesn’t intend to increase reference rates in the next few months. Bank spreads are also low, with rates at 1% or less.
- Demand in peripheral areas has risen
The confinement period has led many families to realise that they need a different type of living space. City properties are being exchanged for houses on the periphery, with lower population density and larger outdoor spaces available (read more here).
- Return of foreign investment will help recovery
According to a study by Cushman & Wakefield, there are around €7 million available for investment in the Portuguese market, which demonstrates that the national real estate market is still an attractive asset for foreign investors.
- Dips on the horizon
The experts foresee significant drops in the real estate sector. With a 30% fall in transactions this year, it is expected that house prices will eventually drop, but not until the banks stop lending. There should also be an upturn in the demand of Portuguese buyers looking to trade their homes, and a revived demand from the international market.
For information on purchasing a property in the Algarve, get in touch with the team at Algarve Home Sales here.
