June 22, 2018 / 1:10 PM / 5 months ago

Portugal property boom accelerates in first quarter

LISBON, June 22 (Reuters) - Portuguese house prices rose over 12 percent in the first quarter from a year earlier, their fastest pace of gains since the country’s housing boom started at the end of 2013, data showed on Friday.

Portugal’s property sector has been a key engine of the country’s economic recovery from a 2011-14 debt crisis, driven by foreign buyers who have snapped up relatively cheap housing mainly in Lisbon, which is going through a tourist boom.

The property gains have prompted a recovery in the construction sector, which is one of Portugal’s biggest employers, after years in the doldrums during the crisis.

The National Statistics Institute said the house price index posted a yearly rise of 12.2 percent in the first quarter after gaining 10.5 percent in the fourth quarter of 2017. Measured by the index, house prices now stand at their highest level since INE started monitoring them in 2009 and have risen uninterruptedly for 18 quarters.

The total value of all house sales in the first quarter reached 5.4 billion euros, a rise of 25.7 percent from a year earlier.

A separate survey on the housing sector found that Portugal’s property boom is spreading across the country from the main hot spots in the cities of Lisbon and Porto that have benefitted so far, indicating more local buyers.

The survey, by the Confidencial Imobiliario property consultancy, found that in the first quarter house price gains were registered in every single Portuguese municipality, the second consecutive quarter of such across-the-board increases. Yearly prices increases were between 3 percent and 22 percent.

“The price gains are spreading geographically,” said Ricardo Guimaraes, director of Confidencial Imobiliario, adding this was helped by growing mortgage lending by banks to Portuguese buyers.

Some economists have said the property boom may soon run out of steam while others say Portuguese house prices are still below many European markets. They have also gained due to sharp growth in short-term rentals to tourists.

Buying has so far been led by foreigners, who have been attracted to Portugal by so-called ‘golden visas’ given to non-Europeans who buy houses worth more than 500,000 euros. It has also been helped by tax incentives to European pensioners who move to Portugal. (Reporting By Axel Bugge; Editing by Toby Chopra)

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