Robust demand for homes in Portugal amid a limited supply is expected to push prices up around 5% in 2018, according to the latest survey by the British Royal Institute of Chartered Surveyors and Portugal-based real estate firm Confidencial Imobiliário.
The organizations, which publish a monthly joint report, revised their outlook for the coming year, increasing their price predictions to 5% from 4%, based on strong market fundamentals. Their latest figures reflect transaction activity through October.
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Market data indicates Porto, the country’s second-largest city, will see even greater price appreciation in 2018 as new buyer inquiries increase to record levels, the report said.
Meanwhile, Portugal’s Mediterranean luxury and second-home hub of Algarve saw a moderate slowdown in October.
While the report doesn’t break out the luxury market, Western Algarve is the center of high-end activity in the country. In 2016, prime prices in that region grew at a moderate 3% rate, according to data from Knight Frank’s Prime International Residential Index.
Portugal’s market is also benefiting from new lending activity, said Ricardo Guimarães, director of Confidencial Imobiliário in the report.
"This is allowing prices to come back to pre-crisis levels," he said.
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The market index computed by Confidencial Imobiliário is now hovering just below the maximum observed in 2010, he said.
Like its neighbor Spain, the Portuguese housing market is riding off of an uptick in foreign second-home buying and renting.
"Market confidence is high ... supported by rising demand namely for tourism properties and short term rental properties," he said.