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Because inflation and rising cost of living will interfere with housing purchases

It is true.

At a time when situations are complex and prospects for the future are difficult to discern, the news we receive daily, weekly or monthly suggests a complex myriad of unknowns.

In addition to the difficulty of developing projections in ever-changing scenarios, the situation appears to have an increasing tendency to deteriorate.

Pandemic, war in europe, inflation, recession prospects; they are all topics under consideration, even when an entry into economic growth and recovery was desired.

Some factors to consider when contemplating scenario development:

  • Increase in interest rates (in July and, expected, in September);

  • Cost of raw materials;

  • Other investment scenarios;

  • Restrictions and conditions on access to credit;

  • Lack of resources such as manpower;

  • Inflation and rising cost of living;

  • Portugal is already in sixth place among countries at risk of a "real estate bubble";

  • Property and rental prices continue to climb despite all these factors;

  • Investment and acquisition remains in the high segments and with other nationalities.

Everything seems to create a perfect storm for middle and low Portuguese.

And nothing seems to be happening to control or reduce the impact of these situations, even with all the "bazookas" that have been announced.

The scenarios?

Banco de Portugal and other institutions already indicate Portugal as one of the countries that are at high risk of a "real estate bubble".

If the projected macro scenarios remain, namely with regard to rising inflation and interest rates, it will affect the ability of families to access housing.

And apparently in all formats: from acquisition to leasing.

Contrary to what happens in other countries, mainly in Europe, the State, in its most varied institutions, are not making efforts that, in good time, can limit the effects of this further impact on the real estate market.

The market is not just made up of high-end investors, or foreign investors.

In addition to the fact that there are already groups of audiences who travel to our country, who also feel and speak out about the high price of the real estate market.

Cities that are not what tourism is looking for

Likewise, with the dynamics imprinted on the market, we continue to de-characterize the cities and what made them known in the tourism markets.

In other words, the effects of activities and licensing of real estate investments should be considered in the impacts on cities.

As with environmental impacts, the characteristics of the investments to be made, and their targets or type of use, should also be considered, providing a stimulus for other ways of inhabiting and living the city.

The circumstances that are developing will continue to "push" the inhabitants to the peripheries, a situation that is complicated by the difficulties and limitations existing in many of our cities (even the largest) of public transport.

Of course, this scenario will increase the use of private vehicles, creating additional problems of pollution and parking in cities (another issue that is not addressed in the development of mobility solutions).

But prices continue to rise...

But all these collateral results add to the rising price per square meter.

20% growth in prices, a decrease in purchasing power, and an eventual correction of values with the existence of a bubble, is putting the market in a situation in which the different actors begin to project antagonistic scenarios.

But the short-term reality is that of an increase in the development costs of real estate projects, with a final price that reflects this reality and that ends up being reflected in the final consumer/client.

With all the actors looking for high rates of return, and the reduced investment in housing models ("build to rent", Co-living, etc.) it will generate a crisis that other countries have been fighting for a long time.

The reduction and limitation, namely in local accommodation, may help a little, but is this the future of the real estate market and will we have solutions to lessen and dynamize an internal market, and one that is favorable for all actors?

What is your opinion?

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