Two tier housing market leads to contrasting fortunes for property in Portugal
Friday 5th of August 2011
The problems that Eurozone countries such as Greece, Ireland and Portugal are suffering are continuing to affect buyer confidence in their respective property markets. This has been particularly true in struggling Portugal, as new research reveals that weakening demand and a ‘two tier’ housing market is continuing to see prices fall in the country.
Prices of Property In Portugal falling at a slower rate than before
The latest Royal Institution of Chartered Surveyors/Ci Portuguese Housing Market Survey has found that demand for Property In Portugal is continuing to fall, although prices are not declining as fast as they have been over recent months.
The National Activity Index fell by one point to -49 whilst the National Confidence index fell by two points to –61. However, the report also points out that house prices are falling at a slower pace than previously.
RICS senior economist, Josh Miller, said: “With the Portuguese unemployment rate at 12.4%, it is unsurprising that house prices and activity is falling, while confidence remains very depressed. Interestingly, the main factor weighing down on prices is falling demand, rising supply is not an issue.
“However, given that the vast proportion of Portuguese mortgages are tied to short term interest rates, if the European Central Bank continues to hike its main policy rate, then the risk of forced selling by Portuguese homeowners will likely increase.”
‘Two tier’ market beginning to emerge
As prices continue to fall, a leading Portuguese Property expert believes that there is a ‘two tier’ market for Property In Portugal beginning to emerge.
Ricardo Guimaraes from CI argues that as access to mortgage finance depends on a borrower’s income and debt levels, wealthy applicants are still being agreed for home loans relatively easily. Less wealthy borrowers are finding it much more difficult to agree the mortgages they need to buy homes.
Mr Guimaraes says that this is creating a two tier market in Portugal ‘with more activity at the top end than in the lower price ranges.’
