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Moody’s forecasts yet higher house prices in Portugal

moodysThe latest Moody’s prediction for property prices in Portugal predicts is for continued growth, citing low unemployment and foreign investment as the reasons.

Greg Davies, senior vice president and senior analyst at the rating agency, said the 12 to 18 month forecast is for property price inflation, especially in Lisbon even though there is a widening disconnection between income levels and real estate prices.

Dismissing claims there is a property bubble in Lisbon and Porto, Davies says that banks are lending at increasing loan to value percentages as price inflation gives them increasing loan security as time goes by.

At stake is a report published by Moody’s this Thursday (December 13, 2018), on the conditions of the domestic real estate market.

According to the Moody’s report, published this Thursday, market equilibrium risks being compromised if buyers keep pushing prices up in Lisbon and Porto, which may turn out to be an unrealistic bet on continuing price inflation.

From the beginning of 2016 until June 2018 of this year, the value of the property sales in Lisbon has increased by more than 46%, citing figures from the National Institute of Statistics.

The banks are benefiting as their non-performing loan ratios have been improving as prices rise, “economic growth, higher credit recovery, amortisation and sale of some non-performing loans have decreased the stock of problem loans.”