New construction projects “will revolutionise house prices”
A report in online paper Jornal i suggests 2019 will start seeing prices for new properties levelling out as more and more construction gets underway, particularly in city centres.
“In the last year and a half more than 49,000 new homes have been licenced”, says the paper, stressing the increase in homes on offer “will lead to a reduction in prices and oblige the owners of ‘used properties to practice less inflated values”.
The effect may begin slowly, but will speed up once new projects have been concluded.
One of these upcoming is the development in Lisbon (Entrecampos/ Feira Popular) which involves a little under 1000 homes, 700 of which are destined for what the council calls ‘accessible rentals to middle-class families’, likely to range from €200 to €600 a month.
But there are dozens of others. In total, projects will see 49,000 new homes created, 39,000 of which will be new-builds.
Talking to various agents, Jornal i heard that “in terms of type, 39% of rehabilitation projects involve T1 or studio properties, while new builds are generally for T3 sizes”.
Luís Lima, president of APEMIP, the association of estate agent professionals, stressed that “house prices cannot, and should not, go on rising into the sky. It’s absolutely normal that prices should start levelling off” – particularly when supply is at last making efforts to catch up with demand.
Another factor that could change the spiralling cost of property in general is the restrictions on banks regarding mortgage lending.
The Bank of Portugal recommended back in July that banks should take care not to lend money to people/ families spending more than 50% of their available income on house purchases. Jornal i explains, this recommendation “could now become obligatory”, and should certainly dissuade owners from ‘inflating prices’.
2018 was another ‘record year’ for property sales with price tags rising by 10-20% in Lisbon particularly, and estate agencies ‘growing like mushrooms’ (click here).
Whether some of these now fail to thrive in the context of a ‘house price revolution’ is the next question.