Bank valuation of homes beats new high of 2011

The price of the square meter in the country was valued at 1,141 euros, the highest value since May 2011. The banking valuation of houses has increased for seven consecutive months.

 

The price at which banks evaluate households when granting housing loans does not stop rising. In October, the value of bank valuation reached a new high in May 2011. The trend of this indicator accompanies the upward trend in house prices in Portugal.

 

According to data from the National Statistics Institute (INE), the average value of bank valuation of houses was in October at 1,141 euros per square meter. This figure corresponds to an increase of six euros compared to the value registered in the previous month, and is also the highest level since May 2011.

 

Evolution of bank evaluation in 2017

Source: INE

 

The rise in house prices comes at a time when house prices are also increasing in Portugal. Data released by Eurostat at the end of October indicate that property prices are growing in Portugal double the Euro Zone average. In the second quarter of this year, house prices increased 8%, on average, compared to the same period last year. In the Euro Zone, the average increase was 4.4%.

 

But much of the justification for the increase in this indicator results from the greater willingness of the banks to grant credit, and specifically for the home purchase. Illustrative of this are the successive downward revisions of the spreads in force in Portuguese banks. In November alone, two financial institutions downgraded their minimum spreads charged on the granting of credit for the home purchase. This was what happened as the "Bankinter", which now has the lowest minimum margin in the market, but also with BPI that has stopped having the highest minimum limit of the market, to start to practice the same value of the New Bank.

 

Bank valuation is a very important indicator because it attests banks' willingness to finance higher amounts against real estate prices. That is, the higher the valuation, the likelihood that bank customers will have access to a financing ratio against the higher property price. In terms of financing amounts granted for home purchase, the upward trend persists. From the beginning of the year to the end of September almost € 6 billion of new loans have been made available for this purpose.

 

Algarve and Madeira lead climbs

 

The increase in bank evaluation was transversal to most of the country's regions. The only exception was the Autonomous Region of the Azores, where a breakdown in bank valuation was visible in October. In the region, this indicator fell from five euros between September and October, to stand at 989 euros per square meter. On the opposite side, the increase of 22 euros in the average price of the bank valuation of houses in the Algarve to 1,450 euros, with that region maintaining the highest valuation levels in the country.

 

The Metropolitan Area of ​​Lisbon is followed by the assessment of houses by banks in October at 1,382 euros, plus one euro than the previous month. The Autonomous Region of Madeira remained as the third region of the country with the highest banking valuation of real estate in the country. This indicator stood at an average of 1,291 euros in October, 21 euros more than in the previous month.

 

Source: Eco.pt