According to the bank, monetary and financial conditions are more restrictive and this scenario is likely to worsen in the final stretch of 2023, with Novo Banco expecting two new increases in reference interest rates by the European Central Bank (ECB).
This situation is expected to have a direct effect on the real estate sector and “there will be a moderation in the number of transactions and a slowdown in prices”, says the bank in a report by idealista.
"With inflation remaining above the 2% target, it is expected that the North American Federal Reserve (Fed) and, above all, the ECB will prolong the rise in reference interest rates", indicates Novo Banco in the report. Specifically, in the Eurozone, at least two new increases in key interest rates are expected, says the bank.
This macroeconomic context has effects in Portugal: "In the real estate market, there should be a moderation in the number of transactions and a slowdown in prices, reflecting more restrictive financial conditions".
And also "private investment will be restricted by the rise in interest rates and by high levels of uncertainty". In terms of public investment, a “strong expansion” is expected, taking into account the implementation of the Recovery and Resilience Plan.
The purchasing power of families will also be even tighter. “Private consumption is expected to be penalised by the rise in interest rates and debt service, but should benefit from a drop in inflation”, the document reads. This is because the year-on-year variation in consumption prices is expected to evolve to around 2%, even though the average annual variation will close the year at close to 5%.