Lisbon rents down 1.4%

in World · 24-01-2020 01:00:00 · 0 Comments

House rents in Lisbon declined by 1.4 percent in the third quarter of 2019, falling for the first time in three years.

Since the third quarter of 2016, housing rents in the capital have risen uninterruptedly, even reaching quarterly variations above 7 percent.
The results have been revealed by Confidencial Imobiliário under the Residential Income Index (IRR), an indicator that follows the behaviour of the lease values of the contracts entered into since 2010.

Since early 2018, the pace of rents in the capital has been showing signs of slowing down, a trend particularly evident over the past year and also reflecting the behaviour of housing prices in the capital. At the end of 2018, the IRR for Lisbon advanced 2.5 percent over the previous quarter, but in 2019 these variations did not reach 1.0 percent, reaching 0.9 percent in the first quarter and 0.2 percent in the second quarter.
Year-on-year growth also stalled, reaching 2.2 percent in Q3 2019. You have to go back to Q3 2014 to find similar year-on-year changes (2.6 percent), at which time the market was starting to show the first signs of recovery after a period in which it accumulated a decrease of 19.3 percent in the value of contracted rents (between 2010 when the IRR series starts and the 2nd quarter of 2013, when the IRR reaches its lowest point). The rent recovery would start in mid-2013, but only three years later rents were back to 2010 levels, then began a period of strong increases both quarterly (average increase of 4.5 percent) and year-on-year ( average increase of 17.3 percent). This growth cycle has allowed rents in the capital to be currently more than 44 percent above 2010 levels, while still recovering 78 percent from its lowest point in the midst of the crisis (2013).
“The length and intensity of the rent hike cycle over the past three years already anticipated a slowdown, which now culminates in the first decline in years. It now remains to be seen whether this behaviour will be an isolated situation or will continue. Reflecting the behaviour of prices, it is not possible to anticipate, because despite the downward trend in the appreciation of the Lisbon Home Price Index, prices continue to show positive variations in quarterly terms, even returning to the level of 3 percent in the last two quarters under analysis, after falling to 0.7 percent at the beginning of the year”, said Ricardo Guimarães, director of Confidencial Imobiliário.



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