The beginning of the crisis is felt in the Portuguese residential market

The residential real estate market in Portugal is starting to feel the effects of the crisis the country is facing, which is a "natural reaction" to the increase in interest rates and the cost of living for families. This is one of the findings of JLL's latest study, Portugal Living Destination, which shows that in the first half of this year the number of homes sold in Portugal fell by 22% compared to the same period last year. The volume of transactions amounted to 14 billion euros, which is a decrease of 16%.

From January through June 2023, 68,000 homes were sold, reflecting "fairly steady demand," according to consultants, based on domestic buyers, who make up 93% of homes sold. Still, the "dynamic presence of foreigners" continues to be prominent.

Portugal Living Destination study

The Portugal Living Destination study concludes that the residential market continues to show positive results despite "profound conjunctural changes" in the last two years. Proof of this is the behavior of prices, which, even in the face of declining sales, have maintained an upward trend. As JLL points out, over the last three years, house prices have risen by 25% and rents by 23%.

The problem remains a "structural supply deficit", says Joana Fonseca, head of strategic advisory and research at JLL.

The supply shortage is a structural problem in the country and continues to worsen year on year, the study shows. In the last year and a half, 30,750 new homes have been built in Portugal and another 46,700 have been authorized, which, despite the increase compared to previous years, "remains below the level of housing construction at the beginning of the millennium (an average of 72,800 dwellings per year between 2000 and 2010), and insufficient for the current needs of demand, which has absorbed 236,000 homes in the same period."

"The market still offers many opportunities for development, due to this constant imbalance between supply and demand. In addition, products have to be adapted to new demand requirements. This is not just a reliance on quantity. The main focus in housing today is to provide homes for all, which includes diversification by location, target segments and even typologies, given the demographic changes that have taken place in the last decade," says Patricia Barau, Head of Residential Real Estate at JLL.

The rental market needs answers.