Despite an improvement in financing conditions in the second half, no fundamental change in the market structure is expected, as the supply of housing struggles to keep up with the increasing demand. In the backdrop, factors such as modest economic growth, geopolitical uncertainties, and the upcoming legislative elections in March play a crucial role.

Some argue that interest rates will begin to decline from May, or at the latest, September 2024. I remain skeptical about this forecast, fearing it could lead to excessive indebtedness of companies and governments—a situation that the American and European monetary policies, not to mention the Chinese monetary policy, cannot afford at this stage of the competition.

The effects of the decline in demand during the summer of this year, due to adaptation to new financing conditions, are likely to be felt only late in the market. However, this will have no impact on the persistent shortage of supply, which will only gradually diminish with the improvement of financing and licensing conditions.

There is no turning back: prices will continue to rise and could even accelerate by the end of 2024. It is crucial to emphasize that the structural reality of the market has not changed, and the scarcity of supply is immediately absorbed. Despite the inflation crisis and the rise in interest rates, there have been no "desperate" sales from Portuguese families or developers. In my opinion, this is due to their solid capitalization resulting from several years of success, eliminating the need to take debt risks.

With consumers adapting to interest rate fluctuations and a potential acceleration of licensing, I foresee a boost on the supply side, perhaps only in 2025 or even 2026. This scenario is also reflected in other European economies such as Poland, Germany, and France, where many real estate projects have been postponed due to financing issues and the expected difficulties for families in obtaining their financing.

Although a slowdown in the price increase is expected in 2024, this does not necessarily mean a price decline, as the persistent demand continues to dictate terms due to the shortage of supply. It is interesting to note that before the 2008 financial crisis, around 80,000 houses were built annually. Since 2015, the year of the real estate boom, only an average of 3,000 new units are introduced to the market each year. The scarcity of supply continues to drive double-digit increases in purchase and rental prices year after year, and it is unlikely to slow down in 2024.


Paulo Lopes is a multi-talent Portuguese citizen who made his Master of Economics in Switzerland and studied law at Lusófona in Lisbon - CEO of Casaiberia in Lisbon and Algarve.

Paulo Lopes