Economics in a picture
Investment in tourist accommodation and property acquisitions by non-residents contributed to the rise in house prices at the local level
Between 2016 and 2020, the median price of family dwellings sales in Portugal grew by 37.2% in cumulative terms. Notwithstanding the general upward trend, there were magnitude differences in the variation at the regional level. House prices tend to be higher on the coast than in the countryside, where there was also the largest increase between 2016 and 2019 (Panel A). One of the factors that has been referred to as relevant to the momentum of house prices in Portugal concerns the role of non-residents, directly via their investment, or indirectly through the demand for tourist accommodation services. Local accommodation establishments are mainly concentrated in the municipalities of Lisboa and some of the Algarve, with little relevance in the rest of the country (Panel B). The Algarve region is also where purchases of real estate by non-residents have greater weight in the total value of real estate transactions (Panel C).
Using a regression model with panel data and municipality-level granularity, we obtain a positive and statistically significant relationship of the number of local accommodation establishments and the weight of purchases by non-residents with house prices.
For more details see Box 4 “Impact of non-resident investment and tourist accommodation on house prices at the local level”, published in the Economic Bulletin of Banco de Portugal, December 2021.
Prepared by Nuno Lourenço, Carlos Melo Gouveia and Sara Serra. The analyses, opinions and findings expressed above represent the views of the authors and not necessarily those of Banco de Portugal or the Eurosystem.
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