At the start of 2024, there was a 7% increase in house prices, the lowest rate of change in the past three years. Simultaneously, the market contracted, with the number of sales and the transaction value dropping to the lowest levels since 2020. These figures were released by the National Institute of Statistics (INE), which reported that in the first quarter of 2024, the housing price index increased by 7% compared to the same period last year. This growth rate is lower than the previous quarter's 7.8%. Since mid-last year, the growth in housing prices has been gradually slowing each quarter.

A market segment, particularly new housing, is already showing a 0.8% decrease in prices while existing housing saw a 1.1% increase. During this period, 33,077 houses were sold in Portugal, totaling around 6.7 billion euros. The INE highlights that this is the lowest number of sales in a single quarter since the second quarter of 2020, the beginning of the COVID-19 pandemic. Excluding the pandemic period, one must go back to 2017 to find a quarter with fewer sales.

The total transaction value is also falling despite the rising prices, reflecting a significant market contraction. However, the market behavior was not uniform across the country. While regions like the North, Center, and Setúbal still registered growth, the Algarve and Madeira experienced sales and transaction value declines exceeding 20%.

The Setúbal Peninsula better resisted the overall market trend. In the first quarter, 3,125 houses were sold, an increase of over 1% compared to the previous year, with the transaction value rising by 5%, totaling around 630 million euros. In the North, the number of sales remained almost unchanged, but the transaction value grew by about 5%, reaching nearly 1.7 billion euros, representing 25% of the residential real estate market.

In Lisbon, despite a 5% drop in the number of sales, the price increase allowed for a nearly 1% rise in the total transaction value, amounting to over 2.1 billion euros, almost one-third of the national total.

In contrast, the Algarve experienced significant declines. The number of sales fell by over 25%, reaching the lowest level since the pandemic began, and the transaction value dropped by about 22% to 733 million euros, a three-year low. In Madeira, the number of sales fell by over 22%, and the total transaction volume decreased by nearly 18% to around 160 million euros.

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