Portugal’s real estate market has stayed resilient over the past year, despite soaring inflation and mortgage interest rates rising sharply.

However, according to the Portugal property market outlook 2023, Moody’s has said Portugal’s house prices could decline by as much as 3% in 2023. 

“The risk of a correction in house prices has increased as inflation accelerates, interest rates rise, and economic growth slows,” said the rating agency, adding that in certain markets, there are “large risks of price corrections.”

In relation to house prices in the country, Moody’s forecasts house price growth in terms of property for sale in 2022 hit 13.9%. Although the agency predicts Portugal’s house prices could hold steady at 1% during this year, there is also the scenario of a price correction to be considered, where prices could drop by up to 3%, MSN reports.

According to UCI Portugal specialists, two of the key trends that will mark this year are property renovations and ongoing foreign investment.

“Real estate renovation has two essential motivations that go together. One is the financial question since, as a rule, it is more affordable to acquire a property to renovate. This type of business is also interesting for investors, who can buy these properties and put them on the market later and make a profit. Another is the environmental issue since property renovations if you take into account energy efficiency, can reduce the emissions of a house. Therefore, renovation and sustainability often go side by side,” according to the CEO of UCI Portugal, Pedro Megre.

In addition, foreign real estate investment in Portugal could also increase this year. The UCI CEO added: “Portugal is in a privileged geographical position, far from conflicts, at the same time that it continues to be a good base for those who want to live in Europe, a few hours by plane from two major decision-making centres while offering good weather, beautiful landscapes, security and a good quality of life. Recently, Americans have stood out as a growing nationality among buyers, something that must be maintained.”