(Bloomberg) – Portugal posted a record increase in home prices due to strong demand and a housing shortage in the southern European nation.
Home prices rose 13% from a year earlier in the first quarter, according to the country’s statistics institute. That’s the biggest increase since the institute started collecting data on the housing market in 2010.
“Portugal, and Lisbon in particular, is in high demand from local and international investors,” said Jose Cardoso Botelho, head of Vanguard Properties, one of Portugal’s biggest real estate developers. “Housing supply is at historically low levels, which has put pressure on prices. In the luxury segment, supply is almost null and demand keeps growing. ”
The housing shortage is partly due to long delays in new building and renovation permits, especially in the city center, Botelho said.
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Portugal’s sunny climate and lower cost of living have also attracted a wave of foreign home buyers, who are willing to pay more than double for a home in the capital city of Lisbon than domestic buyers, the institute said in a report in April.
To try to regulate demand, Portugal’s government has excluded property purchases in Lisbon and the northern city of Oporto from its so-called golden visa program. The program grants foreign nationals a residency permit in exchange for a real estate investment above a certain amount.
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