2023 Portugal Real Estate trends sellers should be aware of now

What trends are we likely to see more of in the 2023 Portuguese Property Market?

Over the past few years, especially the last two, the real estate industry has experienced immense growth. Although this growth slowed down slightly towards the end of 2022, many analysts predict that the real estate market will stay on an upward trajectory for the next few years. Whether you are an individual looking to move homes or an investor with Portuguese real estate assets, keeping up with the current trends in Portugal’s real estate market is important.

Here are 5 trends for 2023 that you should keep your eyes on:

1. Continued demand from overseas buyers

Whilst the raise in inflation and subsequent increases in interest rates may be attributed to a slower pace of mortgage uptake amongst Portuguese residents, the demand internationally to purchase property in Portugal will remain strong.

Not all of those buying from overseas will make cash purchases in spite of interest rates having climbed around the world. Even with the jump to 3% on the Euribor, the cost of borrowing in Portugal still remains attractive to many foreigners whose rates in their own countries are now 7% or more.

2. Demand for high-end and luxury real estate will be maintained

No one is immune to the rise in inflation we have seen over the course of 2022 and therefore high net-worth individuals whose wealth is currently connected to more volatile assets will be seeking to swap their current investment into so-called ´hard assets´ like residential property. This is a means to offset the increasing inflation and safeguard against losses.

Portugal offers a mature real estate market with prices often considerably lower than the countries from which these investors are located, providing them with opportunity as well as security.

3. There will be an increase in inventory

2022 was most definitely a seller's market, and whilst demand will remain high and new construction may become bottlenecked, 2023 will see a gradual increase in the number of properties entering the market. This will result in more choices for buyers. Although the market will not swing entirely and we expect to see a continued upward trend in house prices, it will mean that you can expect your property to remain on the market longer than 7 days before the right offer is presented.

4. As a seller you will need to make more concessions

Leading on from the above, an increase in supply coupled with the significant affordability hurdles home buyers will face, as banks toughen up their lending criteria in 2023, more sellers will become mindful of the changes in the market and will begin to make adjustments to their pricing as can already be seen in recent weeks. Sellers will need to become open to negotiations and be prepared to do remedial work on the property in preparation for selling it.

5. Mortgage rates are still going up but will likely top out and fall in the 3rd or 4th quarter 

Analysts are advising we have not yet seen an end to the rate increases of 2022 and that these will continue to rise until at least the summer. However there is good news on the horizon, the consensus is that rate increases will top out and then drop before the end of 2023.

Whilst there has been a lot of speculation on a property bubble and the impending crash in the Portuguese real estate market, this trend in data suggests it is likely to alleviate this situation and a more normalised market will materialise as we head into 2024.

If you are considering selling your property in Portugal and would like to understand more about the current Portuguese real estate market you can schedule a free sellers consultation with a member of the team here: Sellers Consultation