At the risk of being considered slower than most people who deal with the residential market frequently (NOTE for the more distracted: the meaning of slow defined here will be inspired by the recent creativity of our President of the Republic), I confess that the way housing prices are defined in Portugal makes some impression on me.
I know that we have portals and market studies, which help us with this definition, I believe that the National Institute of Statistics can also provide help, to professionals and laypeople, and we have, naturally, a wealth of specialists (of whom I , obviously, I don’t include myself) who tell us that the houses will go up or down, that they have already gone up a lot or a little or that we will have news on this matter all the time.
I understand that it may be easy for those who are used to dealing with this topic, but there is always a more skeptical part of me that makes me believe that there is, in the definition of property prices, a lot of guesswork, some mistakes and little professionalism. And the thing can even be explained by going to Dr. Google and asking the question both ways. First we asked if house prices will rise, and we found lots of articles that illustrate this trend. And then we ask if he’s going to come down, and a wealth of information appears again that corroborates our research.
Being alive is the opposite of being dead, as our dear Lili Caneças taught us, if I’m not mistaken, and there are, therefore, ways and arguments that allow any real estate professional to throw a price on the table. Because you saw it on the portal, because you know the area, because you did a market study or, at the limit, just because.
The problem, in these things, is that the same type of reason that helps a professional to assert his argument with the client, dies at the base when the client does not agree and says that deadly phrase: “that’s all very nice, but I I think my house is worth x”, and here the “x” is, obviously, a higher value than what the real estate consultant presented. In other words, when the client thinks that he or she is replacing the professional, ultimately that is also because he is.
And, let’s be specific, if there are professionals who actually do things properly, presenting the fair value taking into account the range of variables available (price, m2, year, location, etc.) there are others who, considering this very thing , they deliberately lower this value so that the property can be sold more quickly and receive the coveted commission more quickly.
But, even when this is not the case, as we know, we also have consultants who, in their quest to win over the client and the property, even accept the value proposed by the client, giving space for that to be the first of many interferences. that he will do with the consultant (and the agency) so that his house is sold at the price that the client believes to be correct (and not the one that the professional presented).
It is said in the books that the price is also influenced by the phenomena of supply and demand. And when demand is high and supply is scarce, this opens the way for the biggest market perversions to emerge, with inflated prices just because. Or, at the limit, just because there is a special interest in that area or that specific property.
Likewise, if there is too much supply compared to demand, properties tend to decline, ending up being undervalued because, after all, there are a lot of options available.
I conclude, without, I confess, having a solution to this dilemma. The price of a property and its variation depends on such a diffuse number of factors that getting the right price (or, at the limit, the fair price), is a Totobola move, which may or may not go well for all those involved.
This is not the first time that I have compared the real estate sector with the automobile sector and today I do it again: I have some regret that the market has not yet managed to find in houses what is already happening in cars: prices are what they are and whoever is going to purchase model x of brand y knows that the variation in the final value is small and depends largely on the commercial margin of the stand and less on the determination of the brands that dictate the price ranges.
It is, obviously, unrealistic to think that the path in real estate could go through something like this, but it would be interesting to think of some price regulation mechanism, which would show that property x in zone y can have a certain range. Which would be adjusted, based on quantifiable variables and not subjective criteria. Something that, deep down, was created so that there wouldn’t be so much disparity, but, above all, so that there wouldn’t be so much discretion. It makes sense?
Francisco Mota Ferreira
Weekly column on Mondays. Author of the books “O Mundo Imobiliário” (2021), “Surviver no Imobiliário” (2022) and “Crónicas do Universo Imobiliário” (2023) (Editora Caleidoscope).
