House and apartment prices rose at an annualized rate of 5.46% in the third quarter of 2021, compared to an annualized rate of 10.6% last year.
Portugal’s housing market is still growing, albeit at a slower pace, amid improving economic conditions. According to analytical portal Global Property Guide, in the third quarter of 2021, house and apartment prices in the country rose by 5.46% year-on-year. That’s almost half as much as in 2020 (+10.6%). According to Oldypak LP real estate report, compared to the second quarter of 2021, housing prices rose by 2.85%.
All regions of Portugal have experienced a significant drop in home prices over the past decade. And despite some recovery in 2009, house prices started falling again in the last quarter of 2010. The recovery did not begin until the fourth quarter of 2014, after 13 consecutive quarters of decline. Since then, the country’s housing prices have steadily risen.
After a sharp slowdown last year due to pandemic-related restrictions, housing activity is on the rise again. According to the Institute for National Statistics (INE), in the first three quarters of 2021, the number of construction licenses in Portugal increased 15.3 percent year over year to 21,230 units after rising 2.6 percent in 2020. Nevertheless, supply is still insufficient to meet demand. Housing construction is up 8.4% in 2019 and 43.5% in 2018.
The average cost of an apartment in Lisbon is about €3,830 per square meter. Apartments of 120 sq.m. in the city center can be purchased for about €300,000 and rented out for €1,580 per month. Thus the annual yield is 5.45%.
According to Oldypak LP real estate report, in the third quarter of 2021, the Portuguese economy grew at an annualized rate of 4.2% after a record annual growth of 16.1% in the second quarter. GDP has declined for five consecutive quarters since the first quarter of 2020 due to the coronavirus pandemic. For the full year of 2020, the economy shrank 8.4 percent, its worst performance since 1936.
According to the European Commission’s forecast, Portugal’s GDP will grow by 4.5% in 2021 and another 5.3% in 2022 amid a recovery in exports and private consumption after the lifting of coronavirus restrictions.
By the way, according to a study of the Association of Portuguese Resorts (APR), every euro invested by a foreigner in the Portuguese housing, after five years brings the economy seven euros. Thus, by the end of 2023, the country’s economy will add almost €21 million due to foreign transactions.