Portugal

Overall construction activity

According to the forecasts for the Portuguese economy released by Banco de Portugal (BP), after six years of growth, GDP fell by 8,1% in real terms in 2020, twice the decline the Portuguese economy registered in 2012 (-4,1%).

Following FEPICOP´s estimates, construction sector production grew by 2,5% (in real terms) compared to 2019. This growth, being more moderate than the one observed in the previous year, prolongs the growth cycle that the construction sector is experiencing since 2017. In fact, the construction sector demonstrated, throughout 2020, a high resilience to the constraints caused by the pandemic, with companies maintaining in operation a significant part, if not all, of their production capacity, thus guaranteeing a high level of production.

The growth in production in the construction sector since 2017 was accompanied by an increase in the number of construction workers, which went from 290,000, on average, in 2016, to 300,400 workers, on average, in the first three quarters of 2020. However, over that period of 2020, a year-on-year decrease of 2,3% was observed in the number of workers in the sector, slightly lower than the decline registered for the total number of workers of the economy (-2,4%). As a consequence, there was an increase in the weight of construction employment in total employment, which rose from 6,2% in 2019 to 6,3% in September 2020.

Construction sector production is expected to increase by 2,2% in 2021, although this evolution forecast may be compromised by the evolution of the Covid-19 pandemic and the restrictive measures adopted in the meantime.

Housebuilding

In 2020, the volume of production in the residential segment grew by around 4,5% (in real terms) compared to the previous year.Even with all the constraints resulting from the pandemic, the companies that operate in the residential segment performed very well - particularly those that are active in repair/maintenance works, which registered a growth rate of above 10% (in real terms).The production volume of new housing construction is expected to have almost stagnated in 2020 (0,2%) compared to 2019 (13,9%). This development was probably the result of decisions to postpone several investments.

According to INE data, the number of new housing permits during the year 2020 has been around 23,000, a decrease of about 3% compared to the previous year, while the new housing completions grew by 25,2% until September 2020 (with 12,604 completions so far).

Contrary to the housing completions evolution in 2020, housing sales data reflect a drop in the number of transactions and a stagnation in terms of housing transactions’ global value compared to 2019. Until the end of September 2020, 122,100 dwellings were transacted (-7,7% year-on-year) for a total amount of €18.7 billion.

The major share of transactions (84%) refers to houses in use, although these transactions decreased by 9,0%. New houses transactions recorded a residual decrease of 0,1% in the number of transactions.

For 2021, forecasts point to a decrease of 1% in the residential construction segment, a situation that has not been observed since 2014, due to the high level of uncertainty for 2021 which may lead to new postponements, or withdrawals, of several investments initially planned.