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Progressive increase of building permits planned for 2018

Over the last decade, the licensing of buildings has suffered a significant reduction and their number, which remained high since the 1990s, suffered an unprecedented fall that reached between 2008 and 2017. This is a reduction of 20,5 thousand buildings.

Nevertheless, when we analyse the recent years, we can see a growing trend for licensed buildings, which in 2017 have already increased by 10.6 per cent over the previous year and continue to increase in the first quarter of 2018.

The figures are revealed by the National Institute of Statistics and show that both the number of licensed buildings and the number of buildings that have actually been built increased progressively, thus keeping an upward trend this year.

This growth, which was well evident in 2017, was promoted in part by the immense demand for property, mainly in the Porto, Lisbon and Algarve regions. Domestic and foreign investment, as well as local demand for new build homes to buy and rent out, were some of the engines that led to a significant increase in building permits in the last quarter of 2017 (around 4 , 3 thousand), renovated buildings and constructed homes. Only between the 11th and 12th months of 2017 were there more completions and 19.6 per cent more buildings than in the same period of 2016.

The year 2013 was the year in which there was a further reduction of building permits in Portugal, which was equivalent to 22.7 per cent. These figures, however, are part of the decline observed throughout the decade, which reached a reduction of about 58.4 per cent in permits for building new properties. This figure, which is equivalent to approximately 88,700 built houses, is a demonstration of how this market succumbed to the effects of the economic crisis felt in our country during the indicated period.

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Among the newly built homes, there are 4.3 thousand permits, with 71.2 per cent of new buildings being designed to serve as family dwellings. These are located in several areas of the country, and, despite everything, it is possible to highlight the role of some municipalities in the increase of numbers that is now verified. Councils such as Vila Nova de Gaia, Braga, Setúbal, Porto and Mafra stand out for the greatest absolute variation and achieve a total of 20.1 per cent of the permits carried out last year.

The new constructions, related to works completed with the purpose of building new properties in order to extend them to rebuild or to renovate, also generated an increase of 19.6 per cent in the works recently completed. These are equivalent to the completion of 3,400 new buildings in our country. The indicated figures are mostly new dwellings and are aimed for families as they are trying to meet the demand for property market. These numbers have also accompanied this growing trend, motivated by an intense demand for housing in Portugal's main city centres.

Although the growth in mainland Portugal is immense, it is not only on here that this growth trend with regard to building permits and finished constructions is verified. The Madeira archipelago has shown, along with the Algarve or the metropolitan area of ​​Lisbon, a favourable growth in the number of buildings completed. From this equation, it is only the Azores Archipelago, where the completion of buildings shows a downward trend, which in 2017 reached a 19.7 per cent decrease compared to 2016.

Although the trend is increasing around the country, as already stated by the market demand and property investment in Portugal, the fact is that the North and Centre of Portugal continue to contribute 68,7 per cent of the housing permit, corresponding to about 58.8 per cent of the new homes built in our country. Still, considering the last quarter of 2017, the growth in the Algarve takes over the reins in terms of the increase in the total constructed area, presenting an unprecedented increase, in the statistical value of 506.9 per cent, which occurred due to the effective construction of a new shopping centre and two large commercial units.

These numbers, which began to surprise in 2017 and continue to show a significant upward trend in 2018, are clear indicators of a market and territory readjustment in the face of the increasingly active demand for family housing. This demand, which is due to Portuguese and foreign investors, is motivated by several factors and undoubtedly allied to the economic growth that has taken place and the national reputation, which has gradually become more positive as Portugal begins to integrate with the most diverse international rankings in terms of tourism, lifestyle and safety.

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Engel & Völkers
Licence Partner Portugal

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