Building Permits Down 3.5% While Completed Buildings up 6.0% in 2020

According to newly published data by Portugal’s National Statistics Institute (INE), licensed and completed buildings decreased by 1.0% and 4.1% year-on-year, respectively.

The INE reported that 5,700 buildings were licensed in the period, down by 1.0% compared to the same period in 2019 (+4.0% q-o-q). Completed buildings fell by 4.1% (+1.5% q-o-q), reaching 3,700 buildings. Following year-on-year increases in November and December, newly licensed buildings declined by 17.3% in January 2021. In total, for 2020, 22,800 buildings were granted licensing, while 15,000 buildings were completed, equal to a drop of 3.5% and an increase of 6.0% y-o-y, respectively, compared to +4.1% and +11.6%, in 2019).

Of the total number of buildings licensed, 71.7% were new builds, and of these, 78.4% were residential. Buildings approved for demolition (427) corresponded to 7.5% of the licensing in the last quarter of 2020. The Autonomous Region of Madeira and the Lisbon Metropolitan Area were the only regions that saw year-on-year increases in the total number of licensed buildings in the period (+14.3% and +2.1%, respectively). The remaining areas posted declines, especially the Alentejo (-6.4%) and Algarve (-6.0%).

The number of licensed new builds grew by 1.2% y-o-y in the quarter. In contrast, licensing for refurbishments decreased by 7.8%. Quarter-on-quarter, permitting for new builds decreased by 4.8%, while refurbishments fell by 3.1%. Except for the Alentejo (-2.1%) and the North (-1.0%), Portugal’s other regions posted year-on-year growth in new housing permits, with the Autonomous Region of the Azores standing out with a 20.2% increase.

A total of 6,500 new residential dwellings were licensed in the fourth quarter of 2020, an increase of 7.5%, compared to the 4th quarter of 2019, reversing a drop in the previous quarter (-3.0%).

In an analysis by municipality, the five with the highest q-o-q growth were responsible for 17.9% of the total number of licensed dwellings in the country under construction works (considering all types of works and region). Taken together, these municipalities recorded an increase of 117.5% y-o-y (+798 dwellings). The municipalities with the most significant declines saw a 34.2% decrease in the number of homes licensed for construction compared to the same quarter of the previous year (-560 dwellings).

The number of licensed buildings showed a measure of volatility throughout 2020, with sequential declines from March to May, and in September and October, with April registering the most intense drop (-25.2%). Growth occurred during the remaining months, particularly from June to August (+9.9%, +5.3% and +8.7%, respectively). According to the INE, January 2021 saw a new decline in licensing (-17.3%), in line with what occurred in the beginning months of the pandemic last year.

The total number of completed buildings (new constructions, extensions, alterations and reconstructions) in the fourth quarter of 2020 fell by 4.1% y-o-y (+1.5% q-o-q). Estimates are that 3,700 buildings were completed in Portugal, corresponding primarily to new builds (80.1%), while 77.4% of these were residential.  The number of completed buildings is estimated to have increased by 11.3% in the Autonomous Region of Madeira and by 10.3% in the Lisbon Metropolitan Area. The other regions posted declines, particularly in the North (-11.8%), the Autonomous Region of the Azores (-9.7%) and the Algarve (-6.1%). Completed new builds increased by 1.4% y-o-y, compared to a drop of 21.5% in refurbishments.

The North accounted for 39.2% of the total number of licensed buildings in 2020, with 45.2% of the licensing going to new residential builds, equal to 42.4% of the total licensed area in Portugal. Together with the Centre, the two regions accounted for 66.5% of the total number of licensed buildings, 65.8% of which were for new residential builds, and equal to 68.8% of the total licensed area in the country. Licensed buildings in the Lisbon Metropolitan Area accounted for 16.0% of the country’s total, 21.5% of which were new residential builds (17.7% of the total licensed area).

Estimates were that completed builds in 2020 fell by 42.5% compared to 2011. There were successive decreases between 2011 and 2016, with the most considerable annual decline (-26.3%) coming in 2013. In the subsequent period, the most significant increase came in 2018 (+13.9%). At the end of the period, the pace of growth slowed down again, declining from 11.6% in 2019 to 6.0% in 2020.