The Unassuming Economist

From the IMF’s latest report on Portugal:

“Growth of the Portuguese House Price Index (HPI) decelerated to 9.3 percent y-o-y in 2018:Q4 from its 12.2 percent y-o-y peak in 2018:Q1. Price increases have been more pronounced for existing dwellings, rising 9.5 percent y-o-y in 2018:Q4 and, in particular, in Lisbon and Porto, with the median value per square meter increasing more than 23 percent y-o-y in 2018:Q4. Data from the OECD (…) indicate that the price-to-rent and price-to-income ratios are slightly above their 2000:Q1–2018:Q3 averages, which suggests that housing markets are not significantly overvalued.

A significant part of the transactions driving real estate prices up in key locations are linked to the strong growth in the tourism sector and direct investments by non-residents. The share of purchases by nonresidents in the total number of transactions has strengthened from 2014 (…). Nonresidents were especially active in the higher end of the property market, with the share of nonresident purchases in the total value of transactions in the >€500k segment exceeding 35 percent during 2013–17. These indicators may understate the participation of foreign investors in the real estate market, because some buyers acquire resident status when they buy a property.”