Families are buying more expensive houses and asking banks for more money, reveals a report by idealista/créditohabitação.
The demand for housing credit in Portugal has been shaped by the context of high interest rates and low purchasing power experienced in the last year. Families have been buying houses at lower prices and asking for smaller loan amounts. But at the start of 2024 this trend was interrupted: data from the idealista/mortgage credit quarterly report reveal that the purchase of the first home increased at a price 11.3% higher compared to the beginning of 2023. And the amount of housing credit contracted rose 12.7%. This recovery in the Portuguese mortgage market comes at a time when the fall in Euribor rates is in sight and there has been relief in the calculation of effort rates.
Buying your first home once again became the main destination for taking out housing credit in Portugal at the beginning of 2024, representing 50.8% of total deeds. This is the first change that stands out in the idealista/créditohabitação report for the first quarter of this year. This is because at the end of 2023, loans for the purchase of the first home were surpassed by credit transfers (they accounted for 35.5% and 38% of total contracts in that period, respectively). Now, credit transfers account for 27.9% of the total, being the second most significant type of operation, followed by non-residents (13.9%) and second homes (6.6%).
What was also seen in Portugal in 2023 is that families were buying cheaper houses and asking for lower amounts of housing credit from banks, with lower financing percentages (which presupposes giving more capital down), as reported idealista/news. This was a way for families who wanted to buy a house to adjust to the context of high interest rates and low purchasing power, which was pressured by inflation.
But at the start of 2024 this trend was not observed: families living in Portugal are taking out higher-value housing loans to buy more expensive homes. Looking at the characteristics of credits for the purchase of the first home contracted between January and March 2024 through idealista/créditohabitação, it is observed that:
House prices rise: average value for purchasing a main residence was 240,438 euros in the first quarter of 2024, a value 11.3% higher than that recorded in the same period of 2023 (216,000 euros). Compared to the previous quarter, there was an increase in the price of houses purchased by 8.7%;
Higher amount of housing loans: the average value of formalized housing loans was 169,400 euros, 12.7% more than that recorded in the same period of 2023 (150,257 euros) and 6.6% more compared to the previous quarter;
More financing between 80-90%: 57.1% of loans for the purchase of the first home had higher financing at the beginning of 2024. In the same period of 2023, only 54.8% of loans were financed by banks between 80% and 90% %. In the previous quarter, only 51% had greater bank financing.
The trend is similar taking into account all housing credits formalized in the first quarter of 2024 (i.e. for first homes, transfers, non-residents and second home purchases, among others): the average home purchase price rose 2% in year-on-year terms (to 232,956 euros); the amount of housing credit increased by 10% (to 162,112 euros); and bank financing between 80-90% covered 47.7% of contracts in early 2024, more than in the 2023 period (38.6%). Average financing also increased from 72% at the beginning of 2023 to 76% at the start of this year, the report shows.
Average values of house price and housing credit (euros)
Percentage of housing loans with financing between 80% and 90% of the total
Source: Idealista.pt
