2023 Portugal Real Estate trends buyers need to know
What trends are buyers likely to see more of in the 2023 Portuguese Property Market?
Over the past few years, especially the last two, the real estate industry has experienced immense growth. Although this growth slowed down slightly towards the end of 2022, many analysts predict that the real estate market will stay on an upward trajectory for the next few years. Whether you are an individual looking to buy a permanent home or an investor wanting to secure Portuguese real estate assets, keeping up with the current trends in Portugal’s real estate market is important.
Here are 5 trends for 2023 that you should keep your eyes on:
1. Continued increased costs on new build properties
No one is immune from the rise in inflation we have seen over the course of 2022 or the ongoing work in Ukraine. This and the subsequent increases in interest rates are contributing to an overall increase in the costs associated with building new properties in Portugal. Both to the growing expense of the materials and to the construction credit awarded to developers.
Alongside this is the implementation of more modern building techniques which also added to the final cost of construction.
Needless to say, these escalations will have an impact on the final sale price being marketed to buyers.
2. Longer completion times for new construction
In addition to the increased costs of new construction, there are more lengthy delays being experienced by property developers. This contributes to some new developments not entering the market at all in 2023.
Supply of many materials is still backlogged from the covid pandemic or has been impacted by the Ukraine war. On the other hand planning applications submitted for new projects are being caught up in slow licensing processes in a number of municipalities across Portugal.
As a result, whilst there will still be new construction entering the market, the delivery dates for the completion will be pushed out.
3. Supply will remain below demand
2022 was most definitely a seller's market, with a limited selection of properties entering the market. Whilst increase in rates coupled with inflation will see more resell properties in Portugal entering the market in the first two quarters of 2023, the bottleneck on new construction will result in demand continuing to outstrip supply.
This will continue the upward trend in property prices through the first six months of 2023.
4. Portugal will remain one of the top places in the world to invest in Real Estate
Portugal has climbed from 3rd in 2022 to 1st place in 2023 on the annual global retirement index of the best places in the world to retire. It is ranked as the 6th safest place to live on the global peace index and 12th by the world health organisation for both affordable and excellent health care. All of which makes Portugal one of the most attractive places in the world for ex-pats looking to relocate.
Equally, it was placed 2nd by the economist magazine in its list of 2022 ‘economic winners’, factoring in GDP, inflation, the extent of inflation, stock market performance and public debt.
5. Mortgage rates are still going up but will likely top out and fall in the 3rd or 4th quarter
Analysts are advising we have not yet seen an end to the rate increases of 2022 and that these will continue to rise until at least the summer. However, there is good news on the horizon: the consensus is that rate increases will top out and then drop before the end of 2023.
Whilst there has been a lot of speculation on a property bubble and the impending crash in the Portuguese real estate market, this trend in data suggests it is likely to alleviate this situation and a more normalised market will materialise as we head into 2024.
If you are considering buying property in Portugal and would like to understand more about the current Portuguese real estate market you can schedule a free buyers consultation with a member of the team here: Book a Free Consultation