Real estate will continue to be the safest investment for 2023

How do you assess the real estate market in 2022?

2022 has been a very positive and dynamic year, with sharp growth, both in sales and in leases) compared to last year (76% more). These data show us that, despite the war and a post-pandemic, real estate is the safest and most profitable investment. And that Portugal, due to its characteristics, has been able to attract more and more foreign investors, and maintain a growth trend in counter-cycle with other markets such as the American and Swedish.

The truth is that international buyers see the country as a very attractive place to invest and live. Quality of life, mild climate, ease of integration, security and cost of living which continues to be one of the lowest in Europe.

With the implementation of remote work in the last two years, a citizen with a salary from a richer country, such as the Americans, lives incomparably better here than in their country of origin. Customers with a high economic condition choose to settle in Portugal to be able to live a life with much more quality, focused on well-being, and with much lower costs.

We are a stable and non-violent country, where there are no racial tensions or any type of religious, political or extremist conflict, which are problems that affect most of the countries that have sought us out, such as the Americans, French and Swedes. And every year there are nationalities that “discover us”. In 2022, we had a very strong demand from Americans who choose to settle in our country. The current war scenario also brought several Russian clients who fled the regime and also Ukrainians, who saw Portugal as a safe haven for their families.

What are the challenges that most affected the market?

The panorama of international war inevitably had an impact on the market, bringing a considerable volume of Russian and Ukrainian citizens to the country who needed immediate housing. In the rental market, for example, where there was already a shortage of products, this high demand led to some houses being on the market for less than 24 hours.

Although in the segment where we operate, in the medium high and high segments, a good part of the businesses do not resort to credit, the continuous rise in inflation and Euribor rates has an impact on the decisions of buyers and investors.

What can you expect for 2023?

We believe that real estate will continue to be the safest investment for 2023. However, we will have opposite effects on the market according to the financial relief of families.

For those who currently have savings available, there is no better solution than withdrawing money from the bank and investing in real estate. Let's imagine an investor or family with a million euros available, with an annual inflation of 10%, will lose 8,333 euros per month if they do not invest this amount in a profitable asset. The same happens with foreigners who have the same inflation problem, and who find a mature real estate market in Portugal at a much lower price than in their home countries. These are the agents that drive demand.

But, unfortunately, the majority of Portuguese people live on a monthly budget without breaks. An inflation of 10% represents 100 euros less per month for every 1000 euros of income. If we add to that the increase in interest rates, which are reflected not only in the mortgage payment but also in the car, we come to the conclusion that a family with an average disposable income of 2500.00 euros/month and a home loan of suddenly you have less than 500 euros to 600 euros per month. And these are the agents who are not going to look for a house so soon and reduce the demand.

Which of these two opposing forces will have the most impact on the market? Agents who are available to invest, and do so, in principle, in the mid-high and high market. It is therefore to be hoped that these will not be affected and will continue with the dynamics of recent years. Also very driven by foreigners who we believe will continue to arrive from different geographies.

It is possible that the medium and lower-middle markets will suffer if inflation remains high for a long time, and if family incomes do not follow suit.

Source: diarioimobiliario