The latest data shows that in 2023, the Portuguese real estate market demonstrated resilience with a continued increase in house prices, although the volume of transactions showed a significant decline. The House Price Index (HPI) observed an annual growth of 8.2%, albeit at a slower pace compared to the previous year, with existing dwellings appreciating faster than new ones. However, the total number of dwelling transactions decreased by 18.7%, marking the lowest level since 2017. Despite this downturn in transaction volumes, the increase in average transaction values indicates a robust price appreciation, suggesting a market where demand continues to outstrip supply, particularly for existing dwellings.
On the other hand, the reduction in the number of transactions and the significant drop in total transaction value might signal a cooling phase or buyer hesitancy in the Portuguese property market. For a real estate investor, this scenario presents a dual-edged sword. The sustained increase in property values points towards a potentially lucrative appreciation, yet the diminishing transaction volumes could hint at an upcoming plateau in price rises or a shift in market dynamics favoring buyers. Prudent investors should thus consider both the opportunity for capital gains and the risks of a market correction when planning their investment strategies in this context.
