For CENTURY 21 Portugal and Spain, there are several factors that will influence the real estate market in 2016. Topics such as new construction and residential buildings renovation, lending standards, international demand, technology and the increasing professionalism of the real estate sector will be crucial to meet future challenges of the real estate market.
The housing market is still in a phase of stabilization and consolidation. In 2016, it is expected that the number of sale transactions continues to gradually increase, albeit at a slower pace than that recorded in 2015. We anticipate pressure for rising housing prices in the areas where international demand is concentrated, that is the case in some areas of the major cities such as Lisbon, Madrid, Barcelona, Valencia and Porto. Also the coast regions and islands will register an increasing international demand that will impact housing values. There is a different reality in other regions of the Portuguese and Spanish territory were de domestic demand plays the main role. We believe that the Portuguese and Spanish families purchasing power will limit the housing prices in 2016. Affordability will play a determinant role in housing values.
According to our indicators, international demand will continue to grow, especially in the coastal zones in Lisbon, Porto, Douro and the Alentejo, Spanish Mediterranean coast and islands (Costa Brava, Cousa Dourada, Costa Blanca, Baleares), Costa Del Sol, Canarias and some regions in the North. Spain is one of the leading tourism markets and, therefore, heads the attraction of residential buyers alongside with Portugal. The tax incentives and immigrations programs are also creating an attractive factor with Spain starting to register significant interest from Asian clients. Nevertheless, are the British, French, Belgium, Russians that dominate the demand in Portugal and Spain, with Brazil also playing an interesting role in Portugal. Although the international demand will not have an equal impact throughout the territory.
But the true engine and main actor for the housing market are the Portuguese and Spanish families and, in this respect, the mortgage lenders strategy and its lending standards policy that are loosening progressively will be decisive for market evolution. Therefore, it is essential to be cautious and to pay attention to macroeconomic indicators, such as the unemployment rate and affordability as well as lending standards.
Another important aspect of the real estate market is the fact that, in terms of supply, inventory is low, there is a clear need for new construction and solutions adjusted to the current domestic and international demand, especially in city centers and coast areas. In this sense, building renovation will play a key role in boosting the residential housing offer.
With low interest rates, historical low housing values, strict and quality construction standards, modern health and communication infrastructures, security, excellent climate and historical heritage the Peninsula Iberia is attracting international investor and building a sustainable domestic confidence on the real estate market.