I am basing myself here on several national and international reports published in recent weeks, especially after the aftermath of the last elections in Portugal, which outline the political destiny of the country for the coming years.

In 2023, the real estate market has Portuguese undergone significant changes. After the pandemic, there was an increase in interest in real estate, generating a competitive market. However, real estate sales in Portugal have slowed down.

Added to the uncertainty were global economic and political issues, high inflation, high-interest rates, rising construction costs, and a shortage of real estate. As a result, the real estate market has seen a decline in its activity, fewer houses sold, and increased competition in countries that still offer Investment Visas and rental methods without limitations.

Construction companies, developers, and landlords have not slowed down the rise in prices, because the supply of housing remains limited, and due to licensing issues, not giving way to the needs of the population and the real estate market itself.

But for investors, foreigners' expressed interest in real estate on Portuguese soil is and remains a viable option in the long term.

Government measures, such as the end of the Golden Visa program and the reduction of tax incentives for new residents, reflect a major concern for professionals in the field. However the shortage of homes compared to demand was one of the catalysts for the rise in house prices, thus positioning the real estate market for foreign buyers, alongside regions and cities such as Milan, Madrid, and Berlin.

The real estate sector has Portuguese shown resilience, slowing down less than anticipated and rising less in house prices than expected at the beginning of this Year 2024. It seems to me that we will not have record results again in 2024, but I believe that international demand will not slow down. For this reason and for the inherent issues of the lack of housing in Portugal, I think that the policy of attracting foreign capital to Portugal and its investment visas should take this goal into account. Creating Real Estate Investment Funds with the aim of creating housing for third parties, supported by tax policies that attract large international Funds that already operate in this business aspect would be the key to solving the housing problem, just take a look at the German and Belgian markets to know how well this model has been working for decades.

Despite this, I foresee a significant slowdown in 2024 in the national residential market, and so it is of the utmost importance that we adapt to the changing circumstances of the real estate market in Portugal.

Whether I am an investor, a business owner or even a home buyer, I need to be aware of recent economic indicators, it is crucial to be able to make the right decisions at the right time.

In conclusion, Portugal’s real estate market faces significant obstacles and needs a multi-pronged approach to mitigate the effects of the lack of supply and the increase in bank interest rates.

Author

Paulo Lopes is a multi-talent Portuguese citizen who made his Master of Economics in Switzerland and studied law at Lusófona in Lisbon - CEO of Casaiberia in Lisbon and Algarve.

Paulo Lopes