Lack of supply in the residential market has seen both rents and house prices increase considerably in the first two quarters of this year. This is especially true for Lisbon, Porto and the Algarve, according to a survey conducted by the Royal Chartered Surveyors (RICS) and Confidencial Imobiliário, who publish a monthly report on Portugal's residential property market.
The survey found that estate agents predict house prices to rise by at least 4.5% over the next 12 months, with a further growth rate of an average 5.5% predicted for the five year period ahead.
Last year Portuguese house prices increased on a national level by 12.8%. However, in Lisbon's historic quarters house prices surged by 21.1% in a year-on-year comparison, and have in fact doubled since 2013, according to the RICS survey.
The monthly survey is based on around 100 respondents and in April they predicted that Porto in the north-west of the country would see the biggest surge over the coming 12 months with regard to house values, while their predictions for the Algarve's house prices were the strongest for the five years ahead.
The lettings market saw similar predictions in April and May 2018, and respondents did not believe that this segment of the residential market would see any significant change in the near future.
The May 2018 RICS Survey suggested that there are signs that the lack of housing stock may gradually ease off, with new housing projects finally coming to completion or starting. The rental sector was the beneficiary of this lack of supply, with rents rising sharply month on month this year.
New buyer enquiries rose by more than 28% in May, compared to April 2018, according to the RICS Survey. Lisbon's housing market saw a slight cooling down, showing the slowest rise in sales volumes since November 2017, although sales expectations remain strong, with "solid growth" expected over the summer, with a "net balance of more than 30% of (survey) respondents anticipating an increase in transactions".
Estate agents in Porto reported the strongest increases in house prices, compared on a regional level. Expectations for the five years ahead are that the Algarve will see more moderate increases in house prices and sales volumes, while both Lisbon and Porto's housing market would continue to perform robustly, both with regard to the rental sector and the house sale segment of the Portuguese property market.