A vein of false optimism and anxiety: what lies ahead for mediation in 2023

The year 2022 was a dual year, showing itself as bipolar and even schizophrenic, accompanied by several challenges in the global economy and real estate in Portugal. There was activity, dynamism and business growth, together with the uncertainty caused by the upheaval brought by the War in Ukraine, amidst a post-pandemic situation. Inflation has risen, interest rates have started to rise and the purchasing power of families and savers has decreased, but Portugal is still an attractive investment destination. What to expect from 2023? Edition idealista/news consulted several real estate experts to predict trends and point out the challenges and opportunities that await us in the next year, which is predicted to be somewhat challenging.

Real estate mediation

Real estate intermediation has successfully managed crises, and experts are confident that the industry's resilience will continue into next year. After a dynamic 2022, in some cases setting records for housing and real estate sales, 2023 promises to be a challenge but also a period of growth. Portuguese families will not find it easier to buy homes at affordable prices, although a correction and adaptation is expected, which, however, will not be homogeneous, as the disequilibrium between supply and demand is a major problem that still remains unresolved.

Experts foresee a natural decline or postponement of home buying intentions, especially for those dependent on bank financing, which is expected to be more stringent and demanding. Without incomes sufficient for the cost of housing in the big cities, demand will have to adapt to circumstances and turn its attention to the suburbs, as well as some areas of the interior of the country. At the same time, foreign investment should remain stable and reliable, with some nationalities, such as Americans, standing out.

Report on 2022: dynamic but "bitter"

In 2022, the market remained dynamic and was marked by an increase in real estate transactions, confirming the resilience of the industry, even in the face of uncertainty and the many challenges we are facing now, according to Zome CEO Patricia Santos. According to the head of the company, real estate continues to attract a lot of investments and is a safe option for investment, being "one of the most profitable ways to invest."

Rui Torgal, CEO of ERA Portugal, also notes 2022 as "a very positive year for the real estate market", albeit with rising interest rates and inflation. Luis Nunes, CEO of ComprarCasa, expresses a similar opinion. "We are facing record inflation in the last 30 years and record Euribor rates in the last 15 years. Despite this, the year 2022 will end with some pretty interesting numbers in the real estate market. We are seeing a slowdown in the market, but it is positive," he says.

Interest rates and inflation have indeed been one of the "hot topics" of the year, with a direct impact on activities as well as on household budgets.

What to expect from the real estate market in 2023

Housing prices: stabilization and correction

House prices in Portugal have continued to rise in 2022. The latest data from idealista shows that in November, home sale prices rose by 1.9% from the previous month to an average of €2,460 per square meter. The increase in home purchase prices was noticeable almost throughout Portugal, as house prices rose in 17 district capitals. Based on data for the last quarter and year, house purchase prices in Portugal rose by 2.8% and 5.9% respectively.

But in addition to the lack of supply with high demand, there are other reasons to explain the imbalance in Portugal's housing market and the rising cost of buying a home, including stable employment - unemployment is the lowest in a decade, increased household savings, the availability of banks to provide mortgage credit, foreign investment, and rising construction costs, which have risen again due to the war. As mortgage interest rates rise and purchasing power declines due to high inflation, demand for housing may weaken, which in turn will lead to a slowdown in the real estate market. According to a recent analysis by the Financial Times (FT), the risk of a slowdown in house prices is different in each country.