The price of houses in Portugal will not come down, according to Brussels.

According to the latest report from the European Commission (EC), real estate prices in Portugal continue to rise due to a lack of supply and are expected to continue to rise in the future. "House prices in Portugal are expected to continue to rise, but at a more moderate pace, and that a sharp decline in house prices is unlikely," the think-tank said in a report on Portugal. According to Brussels, there will be a "moderate rise in house prices to come as interest rates are on the rise. "

In addition, in an assessment paper on the country, the EC notes that "there continue to be supply constraints that reduce the possibility of significant price reductions," particularly "in the context of strong demand for real estate from''by foreign investors'.

"House prices in Portugal have doubled nominally over the last decade, with an increase of 34% in the last three years, from 2020 to 2022," the Commission writes.

The organization also notes that "measures have been taken in response to recent house price developments." In this regard, reference is made to the macroprudential measures taken by the Portuguese Bank (Banco de Portugal), which aim to reduce the average duration of mortgages to 30 years, as well as the government's announced "More Housing" program.

Real estate is a threat, but there are "mitigating factors "

Brussels recognizes that the real estate market and its implications for financial stability''"remain an area of concern" as "90% of mortgages in Portugal are variable rate" and an increase in the Euribor rate could "significantly increase monthly loan payments" and expose families to "financial stress".

The commission also says that "the proportion of people overwhelmed by housing costs has increased, at a time when the supply of public and affordable housing remains inadequate. "

The EC says, however, "there are some mitigating factors." For example, the proportion of affordable income needed to cover the average monthly mortgage payment in Portugal "is still acceptable for most families and below the levels seen a decade ago. "

In addition, "macroprudential measures taken''Banco de Portugal in the third quarter of 2018, increased the resilience of families and therefore strengthened the resilience of the banking system'.