Portugal ranked one of the world’s hottest property markets

More buyers are entering Portgual's already growing housing market, according to the latest figures.

In their latest report, RICS and Confidencial Imobiliário forecast the home prices for the major cities in Portugal are set to go up by at least 5% over the next 12 months, up from the 4% forecast in September.

The growth is described as ‘sustainable’, as prices are to see an annual increase of 6% over the next five years. These price gains are expected to be the highest in Oporto, the second-largest city in Portugal.

In addition to this, credit rating agency DBRS said in its latest report that Portugal was among the EU nations that have reported the ‘most notable improvements’ in property prices since the economic slowdown a decade ago. Growth in Portugal was placed at 10%, and was only behind that of Ireland, where prices had climbed by 12%.

Portugal was also among ranked number 2 among the world’s hottest housing market in a Fitch forecast also. Three other nations that tied with Portugal for the second place position were Canada, Germany, The Netherlands, and Portugal — each with 5% projected gains.

“The residential market is benefiting from an increase in new lending activity,” says Ricardo Guimarães, director of Confidencial Imobiliário. “This is allowing prices to come back to pre-crises levels. The residential price index is now less than 1% below the maximum observed in 2010,”

A stronger economy compared to other European Union countries is also being cited as a reason for the increased housing activity in the country.

“Consumers have seen real incomes increase as inflation remains subdued and the unemployment rate at near decade lows. After years of deleveraging, households have been able to increase spending, helping to underpin the recent strength in the housing market,” adds RICS chief economist, Simon Rubinsohn.