Can there be a real estate bubble in Portugal? "Risk is minimal", defends Faria de Oliveira – O Jornal Económico

Can there be a real estate bubble in Portugal? "Risk is minimal", defends Faria de Oliveira - O Jornal Económico


The president of the Portuguese Banking Association (APB), Fernando Faria de Oliveira, said today that "there is great tranquility" regarding the evolution of the real estate sector and that the probability of a serious risk in Portugal "is minimal."

Faria de Oliveira was speaking to journalists on the sidelines of the conference "The Future of Money", organized by Dinheiro Vivo, TSF and EY, about the eventuality of a real estate bubble in Portugal.

"We have reflected a lot on this subject in terms of the banking system together and we consider that, at the moment, in the granting of housing loans, banks comply strictly [..], there is great tranquility, "said the president of the APB.

"Regarding the evolution of the real estate sector in Portugal we consider that there would be a need for some realignment of the real estate offer, there is the price issue that must be followed," added Faria de Oliveira.

However, "the likelihood of this being a serious risk is minimal," he said.

"If we compare the situation [atual] with that which existed prior to the beginning of the crisis, we are at a significant distance from the volumes of credit. They can believe that the banking system is acting with all the prudence ", assured the president of the association of the sector.

Previously, Millennium BCP CEO Miguel Maya had stated during the conference: "I do not believe that real estate in Portugal will be the reason for the next crisis."

Miguel Maya pointed out that "everyone complains that there is a lack of housing", but we must not forget that "this lack resulted from the projects being stopped seven or eight years."

"I have the biggest doubts that this happens," he added.

"Regarding what is happening in the price, we are practicing prices that in some situations is not adjusted for risk", but it is "evident that when there is a lack of supply prices go up," he concluded.

In turn, António Ramalho, the chief executive of Novo Banco, pointed out that "the real estate market has more demand than supply" and pointed out that "there is a real estate bubble when there is not enough supply."

Regarding the resolution fund, which the BCP considered to be a "burden" that has to be resolved, the president of APB stated that the way it was created (to be financed by Portuguese banks) "was actually part of what the legislation predicted, "but" the volumes attained were unimaginable. "

"In reality, they are a heavy burden on the banking system and, as we have been told here [aludindo ao BCP], only in one of the institutions are 40 million euros per year "contribution to the resolution fund, he added.

"I think we have to move forward now, we have to work to make sure that, through the New Bank's evolution, this weight is somewhat relieved, the New Bank needs to be valued, competition for other banks, "he said.

Regarding the Portuguese banking system, in general, the president of APB considered it to be "stabilized", pointing out that, in terms of capitalization, banks "are quite well", profitability is improving, "there was a significant decrease" of bad credit and the industry is working "on the future".



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