“Mais Habitação” programme may lead to price rises and a reduction in supply

Investors consider that some measures in the programme may lead to effects contrary to what is intended.
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One of the main objectives of the government’s “Mais Habitação” package is to allow an increase in the availability of houses and flats on the market. However, this is not likely to be what happens.

According to this Wednesday’s edition of the Público Imobiliário supplement of the Público newspaper, the overwhelming majority of real estate developers anticipate that the national residential market will resent the measures announced by António Costa’s government, causing investors to lose confidence. The most recent survey conducted by the Confidencial Imobiliário consultancy and the Portuguese Association of Real Estate Developers and Investors reveals that 91% of the surveyed developers believe that the “More Housing” package will lead to less supply of properties for sale and, therefore, to an increase in prices.

The director of Confidencial Imobiliário Ricardo Guimarães even says that developers are making a “negative assessment in all parameters” and that in many of them “the programme even seems to produce effects contrary to those intended”: “It will affect the confidence of investors, causing a drop in supply, which will result in a stimulus to price increases,” says the responsible.

However, respondents consider that there are positive aspects, albeit marginal. The simplification of the licensing processes is seen as something positive by investors, although almost half think that the measure will not have the expected effects. In fact, licensing time and bureaucracy are perceived as one of the main obstacles to real estate activity, together with the legislative and fiscal instability caused by the new programme.

Another problem that is aggravated by the new programme is the lack of attractiveness of construction for the rental market (the so-called “build-to-rent”). The Confidencial survey shows that only 12% of investors consider renting attractive, compared to 40% in the previous quarter. And the number of investors who consider this market completely unviable has risen from 14% to 32%.

The outlook for investors is that the quarter will see a reduction in supply and a softening of the rise or even stabilisation of prices.

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