Real Estate Market Trends 2020/2021
In mid-March, at the beginning of the pandemic in Portugal, the real estate market froze briefly. The expectation of what would follow left a deadlock in home sales and purchases. The movement of transactions quickly returned to the usual pace, keeping the value per square metre at the same level as in early 2020.
Photo by Prostooleh – Freepik
The S&P rating agency's indicators predicted an increase in housing values in European markets. The exception would come to Portugal, Spain and Ireland with the record of real estate losses. This decline only became apparent from September 2020 onwards in Portugal, when property owners started to give in and lowered property values.
This decline had not occurred since 2015, forcing the drop to 2.1% compared to August and a slight drop of 0.6% compared to other years. This slowdown in the property market, one of the most stable in Portugal, is expected to be temporary. The S&P agency estimates that by 2021 the market will return with the rise in values and that this will continue for a few more years. In the countries most affected by the pandemic grid, besides Portugal, are Spain and Ireland with values of 1.4% and 1.6% respectively.
Impact on property prices
The impact on the property sector comes from the measures created by the European Central Bank to preserve jobs and businesses. Minimum bank financing has influenced housing values. With tight restrictions on financing, households became less indebted than in the 2008 financial crisis.
Real estate trends
In the first months of the pandemic in Portugal, it was speculated that families would tend to look for homes in rural areas, with a lower population density than in large cities. What happened in the following months was that families were looking for larger houses in or around cities. The weight of amenities, the labour market, schools and public institutions was of greater importance in the geographical choice, the opposite of the initial idea. A house purchase is a long-term investment, and all considerations are measured and thought through, so living near or in a city brings benefits that hardly a rural area has. Find out more about housing changes here.