The basis for this dip in sales seems to be the uncertainty generated by the public program "Mais Habitação", or “More Housing”, and a rise in interest rates, which were noted by respondents as the two main factors putting pressure on transactional activity.

Pressure on sales

"For the agents surveyed, the uncertainty resulting from the Mais Habitação package is affecting buyers and investors, putting pressure on sales, which remain below 2022 levels. Added to this are the adverse conditions in the credit market," explains Ricardo Guimarães, director of Confidencial Imobiliário.

Tarrant Parsons, Senior Economist at RICS, specified that "interest rate rises continue to impact housing market activity, with short-term expectations reflecting a sentiment of restraint. And this is happening during a positive scenario for the economy, as economic growth is anticipated to be around 2.5 percent for Portugal in 2023, comfortably above the Eurozone average," said the economist.

Directing towards rental market

The April survey also shows that, due to these two factors that are putting pressure on the market, residential demand is starting to be directed towards the rental market, leading to a further increase in rents, which were on the rise due to the shortage of supply. With regard to prices, there are no prospects of a decrease, reflecting a possible demand shock, as the market continues to deal with a lack of supply.

In terms of the actual PHMS results for April, the new buyer enquiry indicator returned a net balance of -31% in April, this being the 12th consecutive month in negative territory. Agreed sales returned a net balance of responses of -26%, worsening from -10% in March. In terms of sales expectations, they returned a net balance of -9% in April, remaining in negative territory.

In prices, a net balance of +13% of respondents reported price increases in April, while for the next 12 months, expectations returned a net balance of +28% of respondents anticipating price increases.

In renting, demand has increased, according to a net balance of +40% of respondents (similar to the +35% reading in March). Meanwhile, the reading for new instructions by landlords remains in negative territory (-24%). Consequently, rents continue to be boosted, with expectations for further short-term increases.