Housing rental prices in Portugal are set to rise again in 2022, after remaining unchanged in 2021, but after rising between 2016 and 2020. This, however, will be a slight increase, bearing in mind that, excluding housing, the inflation rate was 0.29% in July. The Consumer Price Index (CPI) rose 1.5% in July compared to the same period in the previous year, 1% more than in June, the National Statistics Institute in Portugal (INE) announced this Wednesday (11 August 2021). Let’s have a closer look at long term rentals in Portugal and how they will see price rises in 2022.
Excluding housing, the inflation rate in Portugal was 0.29% in July 2021, which indicates that rental prices will rise in 2022. This is according to the Portuguese newspaper ECO which bases its findings on the CPI Quick Estimate bulletin, released by the INE on 30th July 2021. In the most recent bulletin, released on 11th August, INE confirms that the year-on-year rate of change of the CPI increased to 1.5% in July, but does not reveal that the inflation rate, excluding housing, was 0.29% in the same month.
“The year-on-year change in housing rent per square metre was 1.9% in July 2021 (2% in the previous month). All regions presented positive year-on-year changes in housing rental prices, with Lisbon registering the most intense increase (2.1%). The average value of rentals per m2 registered a monthly variation of 0.2%, 0.1% higher than the previous month. The region with the highest positive monthly variation was the Algarve, with a rate of 0.3%, with no region having seen a negative variation in the respective average value of long-term rentals”, says the bulletin.
The newest data that will be released at the end of August will allow us to officially know how long-term rental prices in Portugal will evolve in 2021 and 2022. It is to be expected, however, that they will increase, given that this year, the average rate of prices without housing has presented positive values in every month. In other words, there would have to be a sharp drop this month for the result to be different, according to the publication.
If this scenario is confirmed, rental prices in Portugal will rise again in 2022 after being largely frozen in 2021. A stagnation that happened after rises in 2020 (0.51%), 2019 (1.15%), 2018 (1.12%), 2017 (0.54%) and 2016 (0.16%).
Rent increases in Portugal should be between 0.4% and 0.5%
Meanwhile, and according to Jornal de Negócios, the increase in rental prices in Portugal should be minimal, between 0.4% and 0.5%. This is, at least, the forecast of BPI Bank economist Teresa Gil.
“In August, an acceleration relative to July is expected, in line with the behaviour of the global index,” she said. According to the publication, the estimate for the global index (which also includes housing) is that it will reach 0.5% in August, closing the year at 0.9%. Historically, there is no great difference between one and the other [July and August], but “from 2018 to here, there has in fact been a slight deviation of -0.1% in the index without housing compared to the overall index”, said Teresa Gil, admitting that in August it will again be slightly below. “This month [August] the average inflation rate excluding housing will be between 0.4% and 0.5%,” said Gil.
