Funchal Rental Market Stands Out
According to a recent study by Idealista, the availability of rental rooms in Portugal increased by 75% in the last year. However, the city of Funchal experienced a significant decline of 66% in available rooms, coupled with a 20% increase in prices, contrasting with the national trend.
Nationwide Analysis
Examining district capitals, room availability increased in most cities, except for Funchal (-66%), Vila Real (-11%), and Leiria (-2%). Conversely, there was a significant surge in availability in cities like Castelo Branco (232%), Bragança (133%), and Santarém (111%).
Rental Prices Go Up In Most Regions
While room availability increased in most cities, the average in prices for rooms continued to rise. Ponta Delgada experienced the highest price increase at 42%, followed by Castelo Branco (36%) and Santarém (20%). Conversely, prices decreased in Vila Real and Guarda by 20%. Traditionally, Lisbon remains the most expensive city for renting rooms at 545 euros per month. However, Porto and Ponta Delgada closely follow, with prices around 400 and 362 euros per month on average, respectively. Funchal ranked, according to Idealista, at 300 euros per month.
Funchal Sees 342% Increase In Demand!
On a national scale, the increase in room availability led to a 37% reduction in the number of interested parties per room. However, Funchal experienced a tremendous increase in interest from potential tenants and saw a staggering 342% rise. Other cities like Castelo Branco saw a decrease of 70% in demand.
Why Is The Number Of Rentals Increasing Nationwide?
One of the significant factors contributing to the increased availability of rental rooms is the recent and substantial increase in interest rates. With financing options for home purchases becoming less accessible, many individuals find themselves unable to buy a home, leading to a decline in demand for home purchases. Consequently, homeowners who may have initially considered selling their properties are now deciding to rent them. The shift in behavior has led to a surge in demand for rental accommodations, thereby driving rental prices upward.
Why Is Funchal Defying The National Trend?
In the unique case of Funchal, several factors may contribute to its distinctiveness. Firstly, being situated on an island, the supply of rental properties is inherently limited. Additionally, Funchal's attraction to foreign investments and real estate speculation further sets it apart. Homeowners also have numerous opportunities to rent to tourists (Alojamento Local (AL)) instead of long-term tenants. The combination of these factors could explain why Funchal experiences a different rental market dynamic compared to other regions affected by similar trends.
Source: Idealista
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