Fall in demand hits Portugal property market

Despite slight improvements in
the market for property in Portugal, the overall situation remains negative
according to the latest figures. 
Weakening demand for homes is continuing to drive down prices and confidence
in the country’s property market as austerity measures put families off buying
homes.

Weak demand contributing to slow property market in Portugal

The latest Royal Institution of
Chartered Surveyors/CI Portuguese Housing Market Survey found that both the
national confidence and national activity indices improved in July, although
both remain in negative territory.

Property in Portugal continues to
struggle thanks to weak demand. 
RICS senior economist Josh Miller said: “In Portugal, it is the demand
side of the equation that is weighing down on prices. Indeed, the double digit
unemployment rate is feeding through to weakness in new buyer enquiries.

“Unlike in Spain and the US,
oversupply is not an issue in Portugal. The official statistics show no evidence
of overbuilding prior to the economic downturn and new vendor instructions have
been falling all year. Therefore, once the economy starts to recover, Portugal
will not have to cope with the residential inventory issue that other countries
face.”

Algarve performing better than other regions

While the national picture is
weak, there are variations between the main regions of the country.  For example, falls in value slowed in
the Algarve but accelerated in the Porto and Lisbon regions.  In addition, sales expectations
deteriorated in Porto but markedly improved in the Algarve.

CI Spokesman, Ricardo Guimaraes,
said: “Survey respondents note that limited residential sales are due to tight
credit constraints and the government’s fiscal austerity measures, which are
reducing families’ incomes.

“Because of the difficulties
buying a home at the moment, many families are instead turning to the rental
market, which is experiencing a boost in activity.”