The number of houses sold on the Swedish market has been falling – between May and July 13,800 houses and 23,000 condominiums were sold, a drop of 12% compared to the same period last year, according to data from brokerage Svensk Mäklarsamfundet, along with a drop in house prices.
However, the reality in Portugal is different: “We are very far from a mirror. This decline in real estate is not expected in the coming years”, considers Hugo Santos Ferreira, president of the Portuguese Association of Real Estate Developers and Investors (APPII), speaking to Lusa.
Fewer property transactions
Economist João Duque says, in statements to Lusa, that the evolution of prices and transactions in the European real estate market shows that there has been a negative trend since the fourth quarter of last year.
João Duque explains that, although there is still a positive overall variation in the European house price index, calculated by Eurostat when comparing the levels of this index with those of the corresponding index from the previous year, there are some markets in which are negative: Sweden -6.9%, Germany -6.8%, Denmark -6.2% or Finland -5.1%.
“The environment is changing in Europe. Interest rate rises dampen demand, which is expected. The question is whether the offer is comfortable with the property even if it is vacant or whether this condition or the rise in interest rates requires a hasty sale”, he highlights.
João Duque points out that “in Europe, real estate investment seems to be in a recessive moment”, since, in addition to the housing market falling in both prices and transactions, economic activity is in contraction, which does not bode well for good regarding the search for commercial spaces or offices.
Is house price correction a risk in Portugal?
However, economist Pedro Brinca, despite highlighting, in statements to Lusa, that “there is a correction in international markets”, of which Sweden is an example, believes that Portugal is still an exception.
“It doesn’t shock me at all that the price correction is not being observed in countries like New Zealand, Canada, Portugal or others,” he said.
Hugo Santos Ferreira highlights that the most recent data released by the National Statistics Institute (INE) indicates that “houses [in Portugal] continued to increase in value, despite there having been fewer valuations”, which immediately represents “a difference with Sweden ”.
“We continue to have an unbalanced market, in which there is a lot of demand and little supply ”, he emphasizes, arguing that it is “important not to allow assets to devalue”.
The president of APPII maintains that if assets start to devalue as happened in Sweden - which he does not expect to happen -, family wealth decreases, economic, financial, and banking risk increases, and foreign direct investment (FDI) also declines.
Despite the Swedish real estate crisis, Pedro Brinca believes that the country has the tools to respond to the challenge: “Sweden has, in terms of its budgetary position, the capacity to intervene in the sector to leverage any problem in the financial sector, in addition to having its own currency . It gives them another type of weapons that Portugal does not have,” he said.