The 2020 Synopsis
In a year that started calm and where nothing hinted at the whirlwind of events that would completely change our lives, we were faced with a lockdown in March, remote work, masks and alcohol gel. The year 2020 was undoubtedly a social and economic turning point that will have lasting effects for a long time, even after 2021. From day one, after the outbreak of the pandemic in Portugal, very few have been confident about the economic forecasts. The results presented in the second quarter were initially negotiated in the first and finalised in the second quarter, with the lockdown interrupting these transactions for a few months.
Photo Kelly Sikkema – Unsplash
Economic forecasts indicate that even by 2022 we won't reach the levels seen before the pandemic. A reduction of 7.8% was expected last autumn, followed by growth of 4.2% in 2021 and 3% in 2022. The projections are not tumultuous, but the effects will differ from one member state to another. Everything depends on the health policies practised in each country to contain the virus, the economic sectors most affected and the level of response of national policies.
In the real estate sector in Portugal, the housing prices fell from 10.6% to 7.8% in the second quarter of the year. There was a 0.8% increase in house prices compared to 2019, and being possible these numbers were generated at the end of the same year. The slowdown could be seen in the construction of new properties, much more than in the sale of second-hand homes. In February last year, before the pandemic, news came out that the country was among the least who built new housing. Because there were several obstacles to building from scratch, such as tight environmental regulations, a lack of workers or little space for construction, these figures were no longer positive concerning other European countries. The pandemic in Portugal cannot be blamed for the lack of new construction, with other factors preventing it from growing in the country before covid-19 entered our reality.
There has been an abyssal slowdown in the tourism sector, contrary to the usual visitors welcomed throughout the year. At a global level, it was one of the worst years since 1990. In Portugal, the best month for tourism saw a loss of 312 million euros in accommodation only, a drop of 49% compared to August 2019. A decrease in overnight stays by non-residents to 72% was already foreseen due to travel restrictions. The drop was not as sharp with tourists living in Portugal, dropping only 2.1%.
For 2021…
It is still uncertain what we can expect for 2021. Everything will depend on the evolution of the pandemic in Portugal and the consequences of the new lockdown, which began last January 15. It is complex to make predictions, especially after such an atypical year. Now we can reflect on some issues that will change the economy and perhaps start an economic recovery already in 2021. Vaccination against covid-19 started on a large scale across Europe in December 2020. In Portugal, the vaccine’s second dose has already started to be administered, causing the much-desired group immunity to arrive as soon as possible. World policies have changed, and relations between the European Union and the United States may improve.
The pandemic has brought some certainty and hopes to the real estate sector:
- Enjoying a home is a must and continues to be an excellent asset for any buyer.
- Buyers who postponed the decision to buy a house soon made that decision real.
- Everything indicates that the real estate sector is resilient and adapts quickly to any adversity.