- The real estate market in Portugal is starting to feel the crisis.

The Portuguese residential real estate market is beginning to feel the crisis the country is facing, in a "natural reaction" to rising interest rates and the cost of living for families. This is one of the findings of JLL's most recent 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, a 16% drop.

Since January to June 2023, 68,000 homes have been sold, reflecting "fairly steady demand", the consultant said, backed by national buyers, who account for 93% of homes sold. However, "an active presence''foreigners' continues to be evident.

A study by Portugal Living Destination concludes that the housing market is maintaining positive momentum despite "profound conjunctural changes" over the past two years. This is evidenced by prices, which, even in the face of declining sales, continue to rise. As JLL highlights, over the past three years, house prices have risen by 25% and rents by 23%.

The problem remains a "structural supply shortage," says Joana Fonseca, head of strategic consulting and research at JLL. "While it is true that the number of licenses issued has gradually increased in recent years, the rate of new homes coming on the market is still significantly below the volume of demand," stresses''it.

The lack of supply is a structural problem in the country and it continues to get worse every year, a survey shows. In the last year and a half, 30,750 new homes have been completed in Portugal and planning permission has been granted for a further 46,700, which, despite the growth rate compared to previous years, "not only remains below the levels of housing construction at the beginning of the millennium (72,800 homes per year on average from 2000 to 2010), but also insufficient for the current needs of demand, which has absorbed 236,000 homes over the same period".

The market still offers many opportunities for development, as a consequence the imbalance between supply and demand continues. In addition, there is a need to adapt products to''new demand requirements.

The rental market needs answers

According to Patricia Baran, diversity and ensuring affordability for families is achieved through large-scale projects "that cannot ignore rentals". 'Especially with this kind of access, we can't continue to have the scattered market we have now that doesn't meet the demand of those who can't or don't want to buy a home. Only 15% of the nation's housing stock''is under lease'," she emphasizes.

Therefore, in terms of new supply, the consultant highlights the need to continue developing new construction projects on a large scale, but with greater diversification.

In Lisbon and Porto, the rental markets are "particularly feeling the pressure" due to a lack of supply, resulting in "obvious pressure" on rents, according to this study. In Lisbon, JLL notes, rents are mostly above €1,000, breaking the €2,000 mark in central neighborhoods such as Avenida da Liberdade, Centro Histórico, Lapa/Estrela and Campo de Ourique/Amoreiras. In Porto, most neighborhoods also already practice rents above 1,000 euros with the exception of Gaia Rio and Axis''Antas/Prelada/Constituição/Asprela.

The trend that opens up opportunities for the creation of a new offer is rental products, also from a large-scale perspective. The Multifamily segment, for example, has great potential for development and is seen as one of the most effective answers to the problems of access to housing for the population.

But according to Patricia Baran, it is necessary to "monitor this market closely and provide real incentives" as "we have a very young, dispersed and private-to-private market". "It suffers from uncertainty and instability, which negatively affects the confidence of these small hoarders and the withdrawal of property from the market. We will only be able to have a rental market with large-scale projects that