How can it be that there were fewer houses sold in Portugal in 2020, but prices go up?

How can it be that there were fewer houses sold in Portugal in 2020, but prices go up?

Let's try to answer this question by reflecting a little bit on what it is, and how the real estate market Portuguese. The truth that is told there are more houses for sale on the market, but as absurd as it may seem, they are still not enough to satisfy demand. This demand is fuelled by existing liquidity, negative rates and the savings of households. And while 2020 was a recession, national real estate grew in value, sold less, but with higher prices.

Data released by the National Institute of Statistics confirm that there was a significant recovery in the summer. And as a result of this recovery in the summer of 2020, the price of real estate grew again to 8.4%, even taking into account the reduction in the amount of transactions by 5.3%.

However, in response to this phenomenon the average value of the properties transacted was €151,000, which meant an average increase of 8.4% for each transaction. As a whole, €26.2 billion was recorded in real estate transactions, 2.4% more than in the previous year.

Several national economists and fund managers explain this situation by continuing a financial environment favourable to real estate investment, with ample liquidity provided by financial institutions and households and also derived interest rates at minimum levels, which are reflected in a loss of capital of households rather than the growth of savings.

Summing up the context that led to this somewhat surreal evolution, it remains that the national supply does not correspond in any way to demand, both nationally and internationally, for the property in Portuguese lands.

Author: Paulo Lopes