This information appears in the recent report EMEA Residential Property Clock, published by the consultancy, showing that residential rents should increase in all 15 cities in the region analysed by EMEA, for the first time in more than 12 months.

Patrícia Barão, Head of Residential at JLL Portugal, comments, “The imbalance between housing-for-rent supply and demand is at present the main factor governing the rise in rents in Lisbon. There is more opportunity for bank credit when purchasing a house, the option traditionally preferred by the Portuguese, which has resulted in a reduction in demand for rented houses, though this is compensated in part by increased demand from abroad.” On the other hand, regarding supply, she explains that, “the reduction is essentially due to the preference on the part of property owners to opt for Short Term Rental to the detriment of traditional renting.”

This report, regarding the last trimester of 2016, follows the performance of the most important residential markets in the EMEA region, and predicts that this transversal growth will be short term. JLL explain the phenomenon as a result of the rapid demographic change, and a greater limitation therefore to accessing house purchase. Of note is the trend towards growth when contrasting with the 12 previous months, when cities like Dubai or Paris registered rent decreases. Paris registered a rise of 1.3% in house rents throughout 2016, after a decrease of 1.3% the year before. In view of the scarcity of new supply in the pipeline, JLL predict that rents will continue to grow at a similar rate.

Dublin, on the other hand, is one of the cities with the biggest rent increases, which are expected to continue to rise sharply this year, with high levels of price increase, but not reaching two digits, and with available stock levels at an all time low. The recent changes in the Rental Predictability regime might also “push” more landlords out of the market. Warsaw can also be highlighted, where rents grew 3% compared to the previous term, both in new builds and used properties.

Philip Wedge-Bernal, Residential Research EMEA Analyst at JLL comments, “The clock is pointing to a pan-European tendency for housing rental increases, which should continue in the short term. The reasons for this behaviour vary from market to market, but there are factors common to all cities, such as the improvement in macroeconomic conditions and rapid demographic change.”

 “However, the most significant factor may be the critical imbalance between supply and demand,” he continues, that perhaps, “The trend towards urbanisation is creating population pressure on the large metropolitan centres in the region. Lamentably, not enough housing is being built to alleviate this pressure, which is causing rent increases throughout the EMEA area.”  

On the other hand, “Although JLL foresee that rents will recover in 2017, it is also expected that the rate of recovery will suffer as a result of the impact of political and economic uncertainty. It is likely that the elections in key European countries will affect confidence levels in the market, impacting negatively on rent increase.” 

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