Real estate has been one of the sectors that is best resisting the impact of the pandemic and, among the various segments, the big “star” is housing.
At first, with the news of the pandemic and the confinement of people, companies and the economy, many thought that house prices would plummet. “It would not be surprising”, it was said, considering the path of strong growth that prices have accumulated in recent years. But that did not happen.
To date, prices have remained stable and consolidate pre-Covid levels, which is irrefutable proof of the resilience of this sector. Real estate has been one of the sectors that is best resisting the impact of the pandemic and, among the various segments, the big “star” is housing. And there are several reasons why this is so.
(1) First of all, due to the characteristics that distinguish a residential property from other types of properties. They are very versatile properties, which allow various uses. The house is, for the most part, used as a first home, but it can also be an office, a holiday home, a tourist accommodation or a residence shared by students, for example. Its ability to adapt to different needs over time cannot be compared to any other type of property.
(2) On the other hand, the need for a home will always exist, regardless of the situation. And the current situation, despite the uncertainty, follows a period of high demand for residential real estate. In the pre-Covid, the major problem in the residential market was to have the capacity to supply existing demand. This demand has not evaporated. As we move forward and the degree of economic uncertainty decreases, this demand is going to reactivate more and more.
(3) At the same time, there is no downtime on the supply side. Most of the projects under construction have not stopped and there is already a resumption in the launch of new projects. The real estate promotion that is active in the residential market is, in general, going through a positive phase in terms of liquidity, with the capacity to absorb a slowdown in the cadence of sales. This, coupled with greater confidence in reactivating demand, allows us to resist a downward price correction.
(4) There is also the residential component as an investment asset. In this context, this is a sector that continues to provide better returns than low to moderate risk financial products.
(5) In addition, interest rates on loans / deposits remain low and attractive for allocating investment in real estate.
And finally, (6) a crucial aspect that is the “new” perception of Portugal abroad. Property prices continue to be very competitive in the global scenario, the quality of our housing is excellent, cities have taken an enviable leap in requalification, we have a great climate, quality of life, security and good health and education infrastructures. There are also two incentive programs for attracting investment, namely the Non-Habitual Resident and Gold Visa regimes. All of this has not disappeared either. Our country is safe and has unique characteristics that will continue to attract investors from all over the world.
For all these reasons, for now, it is safe to say that housing has been practically immune to the Covid-19 crisis. And that it has the capacity to continue to resist this clash. In fact, if there is hope in sectors of the economy, this is one of those worth investing in!
FOTO: GONÇALO ROSA DA SILVA