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Real Estate Agencies and Developers Optimistic For First Time Since Pandemic’s Beginning...

Proof the optimism came in the form of the Portuguese Housing Market Survey’s results for the residential market.

The expectations of developers and real estate agents regarding future sales and prices in the residential market are once again positive, after a year of the pandemic, according to the Portuguese Housing Market Survey (PHMS) for March. The survey is conducted monthly by RICS (Royal Institution of Chartered Surveyors) and Confidencial Imobiliário, polling the main players in Portugal’s residential property market.

The PHMS Confidence Index returned to positive territory for the first time since February of last year. The index projects market operators’ expectations of future housing sales activity and prices. In March 2021, the index reached 6 points, compared to -68 points during the beginning of the outbreak in March 2020.

The Portuguese Housing Market Survey is a monthly survey conducted in partnership between Confidencial Imobiliário and RICS. Its objective is to provide the Portuguese residential market with an index of Confidence and Expectations, filling the current gap in the sector’s statistical coverage.


Construction Costs Rose by 5.1% in March...

According to the New Home Construction Costs Index (NHCI), which was published by the National Statistics Institute (INE), the price of materials and the cost of labour both rose, up 3.3% and 7.6% y-o-y, respectively.

According to the INE’s report, new housing construction costs rose by 5.1% in March, up 2.8 percentage points compared to February. In March, material prices increased by 3.3% (vs 2.8% in the previous month). Labour costs increased by 7.6% (vs 1.7% in February). The increase reflects, in large part, the base effect associated with the cost reduction seen in March 2020.

Labour costs contributed 3.1% to the year-on-year change in the New Home Construction Costs Index, while the materials component contributed 2.0%. Considering that the monthly increase of the HNCI was 1.3% in March, the cost of materials increased by 0.1% and the cost of labour by 3.1%.

The New Housing Construction Costs Index aims to measure the construction cost of residential buildings in Portugal.


Euribor Rates Unchanged at 3-Months, Up at 6-Months and Down at 12...

The three-month Euribor rate held steady yesterday when it was fixed again at -0.535%, against January 6th’s all-time low of -0.556%, according to the newspaper Notícias ao Minuto.

The six-month Euribor, the most used in Portugal for mortgages, rose to -0.518%, up 0.003 points, against the current minimum of -0.534% of January 28.

The 12-month Euribor rate fell to -0.486%, down 0.005 points against the current minimum of -0.515% (February 2).

The three, six and 12-month rates fell below zero in 2015, on April 21, November 6, and February 5, respectively.

Trends in Euribor interest rates are closely linked to increases or decreases in the European Central Bank’s benchmark interest rates. The rates are an average of the rates at which a group of 57 banks in the eurozone are willing to lend money between themselves on the interbank market.


Porto Had the Highest Increase in Housing Starts at the End of 2020...

In the last three months of the year, the average price of homes in Portugal reached €1,188/m2, a year-on-year increase of 7.8%.

According to the National Statistics Institute (INE), thirteen sub-regions experienced price declines, including the Autonomous Region of Madeira (-8.5%) and the Metropolitan Area of Lisbon (-1.0%). Considering just the 24 municipalities with more than 100,000 inhabitants, Porto reported the highest year-on-year increase (+21.2%) during the fourth quarter of 2020.

The relationship between the prices given in bank valuations within mortgage applications and housing prices suggests lower relative valuations in municipalities with average prices above €960/m2.

In the fourth quarter of 2020, the median price of homes stood at €1,188/m2, an increase of 1.7% q-o-q and 7.8% y-o-y. The pace of increases ticked up slightly q-o-q, rising from 7.6% in 3Q20 to 7.8% for 4Q20, interrupting the deceleration seen in the two previous quarters. The three sub-regions with the highest prices – Algarve (€1,809/m2), Lisbon Metropolitan Area (€1,638/m2) and the Porto Metropolitan Area (€1,288/m2) – reported year-on-year increases of 10.1%, 9.6% and 14.7%, respectively – higher than the average for Portugal (+7.8%).

The Metropolitan Area of Porto (+14.7%) with the highest year-on-year growth, and the Alto Alentejo (€433/m2), with the lowest average sales price, both stand out.

The acceleration in housing prices during the fourth quarter of 2020 was higher than average in eight municipalities (+0.2%) and was most pronounced in Amadora (+6.5%), Matosinhos (+4.5%), Cascais and Braga (both with +4%). Porto registered the highest year-on-year rate of change (+21.2%) in the fourth quarter. In the case of the municipality of Lisbon, housing prices held steady (0%).

Sources: Confidencial Imobiliário / RICS / LUSA / INE / Notícias ao Minuto

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