Don't Go "Off the Market" - Essential for selling your home

The Real Estate market is like any other market, a living system that is governed by the dynamic between supply and demand. To better understand what is currently happening in the real estate in Portugal, we need to analyse what is happening in the market:

 

SUPPLY

The market only offers ¼ of the houses that are needed. For every house that enters the market, there are three more that are missing to balance demand. This shortage of homes is essentially the result of little new construction in recent years.

 

 

DEMAND

Demand is contracting. According to INE data, in the 2nd quarter of 2023 there was a 23% drop in the total number of property transactions compared to 2022. This is due to the crisis: the inflation rate, the consequent fall in household purchasing power and the rise in interest rates. According to the Bank of Portugal, 7 out of 10 properties are purchased with bank credit and, since March 2022, bank credit instalments have increased by around 80% (source: Idealista).

 

 

 

The result of this relationship

The result of the relationship between supply and demand today is that, despite the fall in demand, there is a low supply of houses and that is why, while in most European countries we are seeing a sharp fall in property prices, this is not happening in Portugal. In our country we are not going to see a sharp devaluation of property assets or property sales.

 

However, we are still in a market that is characterised by a decrease in buyers, little demand and the impact of this is a cooling in the valuation of homes, with the residential market registering a variation of 0.8% in August 2023 vs. 5.3% in the 1st quarter of 2022 (Source: Confidencial Imobiliário).

 

This cooling tends towards a stabilisation of prices and, consequently, a correction in owners' expectations regarding the sale value of their properties, which leads to price drops in properties that were valued on the basis of past growth indicators.

What typically happens in this type of market is that if the property is overvalued, it immediately becomes "off the market" and, even in the long term and with the appropriate corrections, it won't be sold.

 

 

 

 

The importance of putting the property on the market at its real value, the value that the market is willing to pay for it, from the outset can make the difference between whether or not the deal goes through.

In today's property market, a property that is within the market price sells, and sells quickly, with around 27% of properties selling in 1 week and the vast majority between 1 and 3 months (source: Idealista).

The main factor that decides whether your house will be sold or not is a rigorous assessment of its value (money and time) and putting it on the market in the most secure way possible to ensure that it doesn't fall through the cracks: off the market and out of the deals that continue to take place on a daily basis.