Data from the latest housing market survey from the Royal Institution of Chartered Surveyors and Confidencial Immobiliario shows rents and property prices in Portugal are still falling due to continued weak demand. This particular survey covers the Algarve, Lisbon and Porto and shows the weakness of residential property sales, although it is the first time it has revealed any signs of weakness in the residential rental sector.
The numbers of transactions and prices have fallen, as at 72% of those surveyed saw price falls rather than gains. The price falls are largely due a decline in demand rather than an increase in supply, as the number of new listings has fallen since December 2010 and there have been no significant building projects in recent years. This declining demand is expected to continue due to the high unemployment rates and a fall in mortgage lending. Unemployment in Portugal is currently at 16.3%.
However the survey did find that the demand for new build homes tended to be better than the demand for existing stock, as residential developers are seeing less severe price declines than residential estate agents. While some estate agents are still pessimistic about the outlook for this year, others feel that 2013 will be better due to an improvement in credit conditions.
Up until now the residential rental sector had benefited from the decline in property sales, but is now beginning to slow slightly. It had previously been boosted by the fact that more households had been forced to turn to rented accommodation due to constraints over mortgage lending. Demand from new tenants dropped slightly, and the number of new instructions from landlords stabilised.