Is there a bubble in the Lisbon Real Estate Market?
Famous investor Warren Buffett is known for saying, ‘Be greedy when others are fearful; be fearful when others are greedy’. In a nutshell, that is the spirit of being a contrarian or value investor: buying cheap assets that have a solid or even fabulous upside. This is the line of thought that can help us address the question about whether there is a bubble in the Lisbon Real Estate Market.
It is known that the Portuguese economy, and consequently properties in Portugal, took a massive beating after the 2008 Great Financial Crisis. The sovereign debt crisis, the Eurozone anemic economy, poor demographics and a European Union which, instead of freeing up economies, asphyxiates them, have left Portugal severely bruised. Still, in the most recent years, and more especially since 2015, the Portuguese economy started showing some signs of resilience, and the real estate market came back from the dead.
So, yes, it is true. Properties have been appreciating in Portugal, and even more so in the Lisbon region — but they are still far from the inflation-adjusted pre-crisis price levels. This is the first point to make about the inexistence of a bubble in the Lisbon Real Estate Market.
Point two is a classic question to consider for the diagnosis: is your taxi driver telling you to buy real estate in Portugal? As you open your newspaper every day, do you find constant articles stating why buying apartments in Lisbon is such a great deal? And, when you’re getting your hair cut, is your hair stylist advising you on buying properties in the Lisbon Region? If the answer to all these questions is ‘yes’, then you’re indeed faced with a bubble. But I’m betting that the answer is a resounding no, which means that there’s no bubble to be feared here.
Actually, the very fact that there are quite some analysts addressing the fears of a bubble in Portugal’s property market indicates that there is no bubble whatsoever. After all, when there’s an actual property bubble, everyone — and I mean everyone — is saying that properties can only go much higher, from here… and that is certainly not what is happening.
From many different perspectives and measurements that can be considered, properties in Portugal are actually quite cheap. Even fancy apartments in Lisbon and Cascais, and amazing and historic properties in Sintra, are cheap, when compared to property prices in London, Paris, or even Madrid (to name a few).
Having said that, it is always necessary to assess any given property on its own — its price, location, amenities, appreciation potential, and income-generating possibilities. That’s why, as a buyer-focused real estate consultant, I can help you find the apartment in Lisbon or townhouse in Cascais or Sintra that has all that a great property investment must have. And the best part of it is that I’ll do it free of charge to you. Just get in touch with me, and I’ll help you make a smart and very rewarding real estate bet on Portugal’s property market.