Property overvaluation may be less than estimated
February 16, 2022 - Portugal
House prices in Portugal have been growing significantly in the medium term, and are currently estimated to be overvalued, mentioned by the central bank. According to a report by ECO, the evolution of prices has shown an “upward trend”, with increases between 6% and 11% since 2016.
In 2018, BdP estimates indicated that house prices had overvalued again — an increase of 33% between the second quarter of 2013 and the second quarter of 2018. However, estimates made based on European Central Bank models ( ECB) suggest that this overvaluation declined to 6% in the fourth quarter of 2020 and the first quarter of 2021.
“Both estimates are subject to considerable uncertainty,” the report reads. And this is because the estimates “do not take into account some of the drivers of housing prices, such as demand from non-residents and demand for properties for tourist activities”. And, “assuming that demand continues”, this “would mean that the current overvaluation of prices is smaller”.
Source from theportugalnews.com