The residential property market in Portugal has deteriorated in the last month according to the latest real estate index published by RICS.

The Institute did report however, that the Algarve region is experiencing better market conditions, (price falls are much slower), than the rest of the country but that on a national level both transactions and confidence are down.

Portuguese estate agents selling existing stock are witnessing much sharper price falls than developers selling new-build stock, especially in Lisbon and Porto.

The national activity and national confidence indices fell by eight and two points respectively to -33 and -51, while the national price balance fell from -55 to -59.

At the national level, the latest results show that price declines continue to be driven principally by falling demand and rising supply is not currently an issue, with new vendor instructions falling consistently this year.

Josh Miller, senior economist at RICS, said: “In Portugal, it is the demand side of the equation that is weighing down on prices, with the double digit unemployment rate feeding through to weakness in new buyer enquiries.”

He added: “Unlike in Spain and Ireland, oversupply is not an issue, the official statistics show no evidence of overbuilding prior to the economic downturn and new vendor instructions have been falling all year.”