In 2023, the Portuguese construction and housing market presented a mixed picture of challenges and opportunities for real estate investors. The number of building permits decreased by 6.1% compared to the previous year, with 23,439 buildings licensed. Despite this decline, the number of dwellings licensed increased by 3.1%, indicating a growing demand for housing. Notably, new constructions for family housing saw a 6.0% increase, highlighting continued interest in residential developments.
The completion of buildings grew slightly by 1.1%, while completed dwellings increased significantly by 9.2%, suggesting that projects in the pipeline are being finalized efficiently. However, the market experienced a notable contraction in transactions, with the number of dwelling transactions falling by 18.7% to 136,499, the lowest level since 2017. This decrease was accompanied by an 11.9% reduction in the total value of transactions, amounting to €28 billion.
The real estate market also saw a decline in bank appraisals for mortgage loans, which dropped by 11.3%. Despite these decreases, property prices and rents continued to rise. The median price of family dwellings reached €1,611 per square meter, an 8.6% increase from the previous year, with higher prices in regions like Greater Lisbon, Algarve, and Porto Metropolitan Area. The rental market also saw a 10.6% increase in median rents for new lease agreements, reaching €7.21 per square meter.
Conclusion for Real Estate Investors
The Portuguese property market in 2023 exhibited a complex landscape. While there was a decline in building permits, transactions, and bank appraisals, the increase in completed dwellings and rising property prices and rents indicate a resilient market with ongoing opportunities for growth, particularly in residential sectors. Investors should carefully consider regional variations and market dynamics when making investment decisions.
On the Other Hand
On the other hand, the decrease in building permits and transactions signals potential risks and a cooling market sentiment, which could impact short-term investment returns. The reduction in bank appraisals also suggests tighter lending conditions, which might constrain financing options for new investments. Therefore, investors should approach the market with caution, considering the potential for slowed market growth and the importance of selecting high-demand regions to mitigate risks.
