The world economy has been affected negatively by COVID-19.
Almost all sectors are seeing declines, including property investments. But for some reason, Portugal’s market is doing well.
How so? We’ll discuss that below.
Around 35% of property purchases in Lisbon were done by foreign buyers.
We can see that in the 2020 performance of the Portuguese market. Early 2020 saw a strong market, regardless of the pandemic’s effect.
The market showed no signs of slowing down. In fact, since 2016, residential property asking prices in Porto had gone up by 83%, and Lisbon’s by 49%.
Also, the Algarve witnessed a property price increase by 50% in that time span.
Foreigners contribute greatly to Portugal’s property market. And their presence has played a key role in keeping it functional.
From a foreigner’s perspective, Portugal combines a high life quality and cheap property prices. This makes it a prime choice for those seeking foreign residency.
A contributor to that is Portugal’s Golden Visa, which provides a gateway for foreigners that fuels property price booms.
No Drops in Portugal’s Market ?
Not really. Some niche areas have witnessed drops from the pandemic.
One is Lisbon City’s housing prices. They fell by 3% in 2020, which isn’t much. If anything, it shows the property market’s resilience to COVID-19.
Other cities such as Porto saw a 4% climb. Algarve witnessed a 12% climb in housing prices.
We assume the price hikes will accelerate after the pandemic’s short-term restraints are solved.
Even More Stats
The Housing Price Index shows interesting numbers for Portugal. In 2020, the index had an 8.4% positive change. It is a small 1.2% drop from 2019, but that’s still an increase.
Over all, this means that price growth has been uphill. So it seems that the property market is ignoring all stages of the pandemic.
Additionally, even though prices dipped slightly in 2020, there was a greater volume of property investments registered.
In fact, Portugal registered the 3rd greatest investment turnover, and the 2nd and 3rd biggest transactions in 4 major shopping centers (plus office complexes).
If anything, it’s a sign that investors are confident in Portugal’s property market performance post-pandemic.
What About Future Projections?
While Portugal is the least affected of European economies, many see that there’s still uncertainty left ahead.
Circumstances can change as a result of the pandemic. That may affect the economy’s recovery time, especially with regards to housing prices. However, while predicting performance will be hard this year, there’s hope that Portugal’s economy will recover fast.
This especially comes in light of the upcoming changes to its Golden Visa program (in January 2022).
The changes will affect major real estate investment hubs, such as Porto and Lisbon, and the hotly explored Algarve.
Those changes are projected to have a positive effect. Their aim is to spur investments in lesser explored parts of Portugal, which may revive the economies of smaller towns and cities.
However, real estate has been a main recovery engine in Portuguese economic downturns. And with major demand by overseas investments, recovery should be seen in no-time.
In fact, according to CBRE’s forecasts, Portugal’s GDP should see fully recovery towards the end of 2022, reaching 2019 levels again.