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Brussels “concerned” about overvaluation of Portugal house prices

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The European Commission highlighted its “concerns” about Portugal. Rising house priceslevels of public and private debt showing “signs of overvaluation” and “persistent macroeconomic imbalances”.

In a report published in alert mechanisma risk-screening exercise for potential macroeconomic imbalances, community executives said: [Gross Domestic Product] After the Covid-19 crisis, the debt ratio has returned to a downward trajectory, but has held up.”

“Nominal house price appreciation is accelerating, and there are signs of house price overvaluation.”

Persistent “imbalance”

In this year’s Alert Mechanism report, Brussels concluded that drastic revisions were needed in Portugal and 16 other member states, with Portugal’s continued macroeconomic “imbalances” and its Some have already been detected.

At a time when the EU economy is transitioning from recovering from the Covid-19 pandemic to a significant slowdown in growth due to inflationary pressures, Brussels has emphasized in Portugal from the outset that: house is increasing. ”

“Nominal house price growth accelerated from 8.8% to 9.4% in 2021. Nominal y/y growth in house prices accelerated to 13.2% in the second quarter of 2022. Housing 2021 Prices were estimated to be 23% overvalued – One-third of mortgages have fixed interest rates of up to one year.

public debt

Other “serious concerns” relate to public debt, the European Commission said, warning that “fiscal sustainability risks are high in both the medium and medium to long term.”

As for private debt, “vulnerabilities related to the ratio of non-financial corporate debt to GDP remain, but are trending downward,” noted community executives. Still, “there are risk factors associated with the macroeconomic environment.”

Household debt as a percentage of GDP “decreased in 2021 and continues to decline in the first half of 2022, but remains above both health and fundamental benchmarks.”

In this annual exercise, using the Alert Mechanism report, Brussels will identify Member States that require in-depth analysis to assess whether they are affected by imbalances that require political action. .

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