Portugal has been considered an “undervalued housing market” in a recent international report by property consultants Knight Frank.
The report is based on OECD (Organisation for Economic Co-operation and Development) data and assesses how house prices are performing compared to rents and incomes.
In Portugal, data shows that rent and income prices continue to drop with properties being rented and sold at lower prices than the home’s real value.
Greece, Ireland, Slovenia and the Czech Republic are also included in the group of undervalued markets, as well as Germany and Japan, which the report stresses “missed out on the double-digit price growth observed in many developed economies in the early 2000’s”.
On the other side of the spectrum are overvalued markets, which include Norway, Canada, Belgium, New Zealand, Australia, Sweden, United Kingdom, Denmark and South Korea.
Also considered overvalued markets are Finland, France, the Netherlands and Spain, although house prices are tending to decrease in these countries.
United States, Italy, Austria, Iceland and Luxembourg, however, are the most stable markets where prices and rents seem to be the most balanced.
All in all, the Knight Frank specialists believe 2014 has brought a “steady stream of positive indicators for global housing markets”.
“Lending criteria is being relaxed, interest rates in Europe, the US and the UK look set to remain at historical lows at least until 2015, employment is picking up and buyer confidence is strengthening,” they say.
As their report stresses, “the upturn in the global economy, albeit gradual, has meant that for some, home-ownership is back on the agenda for the first time since 2008”.
Second homes
The Knight Frank report also includes data on second homes as well as some tips and considerations on the risk of purchasing one during the current economic climate.
For example, Praia da Luz and Quinta do Lago in the Algarve are selected as examples of key second home destinations where prices have fallen considerably (-30% and -20%) since the onset of the crisis in 2008.
Other examples include Marbella, Spain (-35%), Gascony, France (-45%) and Umbria, Italy (-30%).
To read the full report, visit www.knightfrank.com
Portugal house prices “undervalued”
