Property Market Trends Forecast 2022
Want to know more about the housing market in 2022? Will house prices rise? Get to know the forecasts for the year 2022.
In the year 2021, several trends and changes were identified in the real estate sector and many of them indicate to us how the behaviour of the 2022 market.
Indeed, with the onset of the pandemic and the consecutive confinements, many thought that housing prices would plummet or that demand levels would abate. However, none of this happened and by 2021 house prices were still rising.
After having registered an increase in the order of 10% in the price of the square meter in 2021, the real estate market in 2022 promises to continue to rise. An increase explained by rising demand and inflation.
In fact, if you're also looking for a house, you've already come across the fact that there isn't as much supply as there was a few years ago. This is due to the economic situation and the pandemic that the country is going through and the the crisis in materials and manpower that is currently being noticed.
All these factors have caused prices to rise and consequently a growth in property sales in Portugal. But what, then, are the prospects for 2022?
Increase in construction costs
If you started rebuilding a house or starting construction from scratch, you probably experienced a difficulty in finding labour at so-called "normal or reasonable" prices before the pandemic.
According to INE, in October, the price of materials increased by almost 9% and labour cost about 5%.
The truth is that the emergence of Covid-19 and the consecutive confinements made some labour shortagecausing an increase in the associated costs.
In addition to this, it is also possible to observe a shortage of building materials. Countless factories were forced to halt or significantly slow down their production processes overnight.
All of these factors have contributed to a further increase in the construction costs of houses by 2022 - whether to rebuild or build from scratch.
New mortgages with a maximum term of 30 years
In 2021, the Bank of Portugal had already limited financing in relation to the value of the property, as well as the effort rate of each family. But in 2022, it is the turn of the deadline.
To give you an idea, in 2020, the average maturity of the home loans in Portugal was 33.2 years. This means that there are several people taking out 40-year loans, mainly the younger ones.
Thus, in mortgages the Bank of Portugal recommended that "the average maturity of all new contracts should gradually converge to 30 years by the end of 2022".
According to the Bank of Portugal, gradual convergence is understood as "an annual reduction, tending to be linear, of the differential observed between the average maturity of new 30-year loans," so that an "abrupt reduction in the maturity" of housing loans is avoided.
Potential rise in interest rates
As we know, the interest rates are lower than ever. And, for that very reason, it is expected that they will increase. Proof of this is that in November last year, interest rates for buying a house increased again.
According to the National Statistics Institute (INE), the implicit interest rate in credit contracts for house purchase rose 0.821%, up 0.2 basis points on October.
Inflation, on the other hand, which is on an accelerating trend, looks set to lastThis may even lead to some changes in monetary policies and corrections in interest rates (with an impact on mortgage loans and installments).
Although the European Central Bank announced that there would be no changes in monetary policy for the time being, it is essential that we are prepared for adjustments to be made in 2022.
Rising house prices
One of the trends of the property market in 2022 is precisely the increase in house prices. After seeing an increase in construction costs, an increase in demand and a decrease in supply in the real estate sector, it is possible to state that house prices will continue to rise.
In the first quarter of 2021, house prices increased by 9.9% year-on-year and have been maintaining a upward trend due to rising raw material costs and high demand.
In addition, the the imbalance in the market balance (between demand and supply), leads to continued house price increases.
However, although it is possible to have a perspective of what's to come, the truth is that the real estate market is not at all linear. So, if buying a house is part of your resolutions for the new year, know that the important thing is to keep yourself informed.
