The mad house prices

Lisbon is not an isolated case. It is not only in the Portuguese capital that prices rise and that there is a real estate boom. There have been records of transactions in New York and Paris and Barcelona, for example.

In Lisbon, there are houses that are sold at Paris prices. They are luxurious, and not too many. But there are many options, with much lower prices. Here and there.

Last year an apartment of 200 square meters (m2) was sold on Rua Ivens, in the heart of Chiado, in Lisbon, for 14 thousand euros / m2. Something like 2.8 million euros. This is a house in a building that had been recently rehabilitated and that besides the balcony with a view and space for three parking places - a find for those who want to live in Chiado - is fully equipped with a smart home automation system that, for example, closes the blinds as the sun goes down. A little further down, near the Cais do Sodré, for about 16,000 euros / m2 was requested about a month ago for a T4 in a project that is not yet under construction. And on Avenida da Liberdade was sold, also last year, an apartment with a private pool for about 10 thousand euros / m2.

Is it crazy for the city of Lisbon? For some, there is no doubt that yes. Because they say, they are not adequate prices to the income of the Portuguese and that they inflate the whole market. But for the various real estate consultants, it is still too early to anticipate that Lisbon will have one of those television programs about homes that are sold at millionaire prices.

"This 10, 12 or 14 thousand euros per square meter thing is circumscribed to a very small area, which is the axis that runs from Avenida da Liberdade to Chiado. This is only true of very specific, new or rehabilitated enterprises. In addition, it is a type of product that is aimed at investors, whether Portuguese or foreign, "says the director of real estate consultancy Prime Yield, Nelson Rego.

It is true that the prices mentioned are very close to those practiced in Paris or London, but the segment is the same, that is, these are luxurious houses (see infographics). "They are very far from representing the reality and most of the prices that are practiced," comments Nelson Rego. In addition, he says, this area of Lisbon "always had the most expensive houses, even in the midst of crisis. For example, in 2012, the average price of a rehabilitated apartment in the parish of Santa Maria Maior was already 6382 euros per square meter, according to our data. "

INFOGRAPHICS CARLOS ESTEVES

The various indexes available in Portugal show that prices in most parishes in Lisbon are much lower than these values, although there are differences when the median is used, as in the case of the National Statistical Institute (INE), and when the average is applied, as in the case of data from statistics company Confidential Real Estate.

Thus, according to the INE data for the fourth quarter of 2017, the median values per square meter of houses transacted in Lisbon - new, rehabilitated or used - reached 2438 euros. The parish that includes Chiado is one of those that present the highest values per square meter, that is, 3333 euros. But for example, prices per square meter in Benfica are 1932 euros, in Penha da França they reach the 1995 euros and in Avenidas Novas they reach 2835 euros.

Although, according to statistics firm Confidential Real Estate, which uses the average price per square meter, in Benfica, the figures per square meter exceed 2100 euros and in Avenidas Novas 3430 euros.

And the same happens in Porto, where the values per square meter are now 1307 euros, and in the parishes where the most expensive areas are, such as Foz and the historic centre, prices per square meter have reached, respectively, 1955 euros and 1512 euros. But in the zone of Campanhã, one of the cheapest, the values practiced are 822 euros / m2. It may seem insignificant when compared to the capital, but it is historic: "In Porto, the values are half that of Lisbon, it was always like this", notes Patrícia Beirão, the head of the residential department of JLL, another of the leading real estate consultants operating in Portugal. And he concludes: "Because a house is sold at 14,000 euros per square meter we can not say that all sell at that price. These are unique pieces and they are few. "

There are three decisive factors when defining the price of a property: location, location, location. But the details, such as a private swimming pool on Avenida da Liberdade or parking in Chiado, are gaining increasing importance and helping to push prices up. Because there has been a sharp increase in prices since the crisis years (2011 to 2015) and especially in the last two years. And it was not only in new homes but also in used ones.

Looking at the parish of Santa Maria Maior (which includes Chiado), prices rose 30 percent between 2012 and January 2018, according to data from Prime Yield. From 2016 to 2017, according to the INE, the increase in the city of Lisbon was 18.1 percent, is 10.2 percent in the parish of Santa Maria Maior. In Porto, prices rose 17.6 percent.

Of course, it's not just the private pools and the blinds with sensors to explain these increases. They are due to a series of conditions of the market, fruit of the crisis and the current economic conjuncture. This is the case of the lack of supply of new houses that are in the market. "For many years, even before the crisis, there was no new construction and this caused a lot of pressure on the prices of used houses, the largest market share," says Nelson Rego. It is only in the last three years that we have begun to rehabilitate more houses, and it is only now that some new construction begins to appear timidly.

Banks are also lending more money, albeit more conservatively, and "interest rates are historically low, which makes investing in stocks less advantageous, and therefore the large funds channel the money they have to the real estate, "explains Patricia Climaco, partner of Castelhana, a luxury real estate agent. In addition, she continues, "cities have more tourism and houses are no longer just for housing. We also see that there are more Asians buying and they like to invest in real estate, to have many homes. They even had a limit on their homes, which made them creatively divorce in order to have more houses."

That is, Lisbon is not an isolated case. It is not only in the Portuguese capital that prices rise and that there is a real estate boom (see infographics). "There have been records of transactions in New York and Paris and Barcelona, for example, where house prices have risen a lot," he concludes.