First drop in rental prices in Lisbon since 2016
Is something happening in the Portuguese capital real estate market ? In fact, the residential income index recorded in the third quarter of 2019 the first negative variation since the third quarter of 2016, according to data from Confidencial Imobiliário. The mad increase in rental prices in Lisbon is coming to an end, after years of increases which have caused housing difficulties for locals. Some see it as a financial bubble burst, others as a simple adjustment. This 1.4% drop is the first for several years. At the national level, the increase was 0.2%, and 2.5% for Porto. Lisbob, the expatriate assistant in Portugal, tells you all about the falling rents in the Portuguese capital.
First drop in rental prices in Lisbon since 2016
Rents down 1.4% in the Portuguese capital
Real estate rents in Lisbon recorded a negative variation of 1.4%, the first of the last three years. Since the third quarter of 2016, the Residential Income Index (IRR) has been constantly increasing, so that a negative change was already expected by professionals in the sector.
However, it is still too early to interpret this development as a trend reversal according to Confidencial Imobiliário. Indeed, the rent index has increased for 12 consecutive quarters and the quarterly variation has exceeded 7% at certain times.
"The market has already shown that it picks up speed at certain times," explains Ricardo Guimarães, director of Confidencial Imobiliário. However, the specialist preferred to speak of a "point of equilibrium" reached rather than a market reversal.
Lisbon different from the rest of the country regarding rental prices
Lisbon different from the rest of the country
Between 2010 and 2013 rents in the Portuguese capital fell by 19.3%, which subsequently led to a recovery period. In 2016, rents even returned to values similar to 2010, then more extrapolated quarterly increases.
The history of the evolution of rent prices in Lisbon shows that between mid-2016 and 2018, the index increase was 4.5% per quarter on average in the Portuguese capital, while, in sliding annual, the increase over this period reached 17.3%. Going back in time, the variations take on other proportions. Indeed rents in Lisbon were 44% higher in the third quarter of 2019 than in 2010.
The situation in Lisbon is different from that of the rest of the country. If we look at the data at the national level the rent index to increase by 0.2%. In the case of Porto, there was even a further acceleration in the rise in rents with quarterly growth of 2.5%.