Before the financial crisis began in 2008, Portuguese property prices were some of the highest in Southern Europe. Today, after years of price falls, research by the OECD suggests that property in Portugal is now undervalued by between 5 and 10 percent. This analysis is based upon ratios for rents and wages compared with the long-term average.
A report on Portugal published by the Royal Institution of Chartered Surveyors (RICS) remained more cautious about the prospects, despite a recovery in confidence. It said: "House prices remain in decline, but at the slowest pace in the survey’s history. Despite this, respondents are still projecting further falls in the coming three months.” It added: "Lisbon was in fact the only area to see a pick-up in activity, whilst Porto remained stable and the Algarve experienced a marginal decline."
The general trend is supported by positive expectations, driven by the improvement in the economic environment. However concerns remain over the continued impact of strong credit restrictions still imposed by the financial institutions. Comments by the ratings agency Fitch also show confidence in the Portuguese market. The company picked out the UK, Ireland and Portugal as the three countries most likely to see property market recoveries as a result of positive central bank policies.
However, Lisbon remains somewhat unique within Portugal. Whilst price falls are slowing everywhere and the consensus view is that Portuguese property in general is undervalued, the Lisbon market has already experienced significant recovery. Since March 2013 the market in Lisbon has been the almost exclusive beneficiary of demand generated by international investors seeking Portugal’s Golden Visa.
Within Lisbon itself areas such as Baixa and Expo have seen significant price recovery although prices remain good value by European standards. This relatively rapid year on year growth has pushed demand outward to the areas close to the Lisbon metropolitan area, particularly Cascais and more recently the Silver Coast.
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