Limited Supply and Strong Demand: Housing Prices Expected to Remain High in Portugal
Fitch does not anticipate a reversal in the upward trend of housing prices in Portugal, citing limited supply and strong demand from both Portuguese buyers and foreign investors.
Juan Garcia, Senior Director of Structured Finance and Covered Bond Ratings at Fitch, said during a webinar on Portugal’s economic outlook that housing prices are unlikely to decline “because supply remains limited and demand is strong from both domestic and foreign buyers,” including investors from across Europe and other parts of the world.
The analyst noted that access to housing remains challenging, particularly because the pace of nominal price increases has been faster than wage growth.
Under these circumstances, he said, “we do not expect a reversal in house prices in the short term.”
Fitch was also asked about potential risks to the banking sector arising from mortgage lending. However, Julien Grandjean, Director of Bank Ratings, said he does not see any significant deviations or risks at this stage.
“The increase in prices is driven by strong demand and limited supply,” he reiterated, adding that the Bank of Portugal “imposes very strict requirements on the loans banks must grant,” which adds “an additional layer of prudence.”
Furthermore, the analyst noted that recent mortgage loans have seen an increase in fixed-rate and mixed-rate contracts, which contributes to greater financial stability.
Fitch forecasts that nominal house prices in Portugal will rise by 15% in 2026, following a record 18% increase in 2025.
Reference link: https://www.noticiasaominuto.com/economia/2953722/oferta-limitada-e-forte-procura-casas-vao-continuar-caras-em-portugal
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