So, where are the discounts ?
Many potential property buyers have been waiting for this answer for a few years already; to find that one luxury home with privacy, located close to the ocean with views until Morocco and a massive discount that even an uninterested buyer can't refuse.
Chance it will happen? ……………. probably none!
Portugal is widely seen as the expensive neighbor of Spain, where prices have dropped drastically and where the oversupply will have properties to sell for a decade to come. In Portugal, average house prices in 2009 have shown a positive trend upwards and banks are valuating properties higher than 2008. Indicating the real estate market in Portugal is extremely stable amidst the panic in many markets around the globe.
The banks in Portugal have been far less exposed to the global financial crisis than many other banks. Mortgages, although the approval process is stricter, are still available for residents and non-residents, and the rates are currently amongst one of the lowest in Europe.
There seems to be a general refusal by private sellers, builders and developers to slash prices. But why? You would ask yourself? Well, real estate is not exactly rocket science and it's a question of supply and demand. Portugal will have an increase of foreign residents and by 2030, and the Algarve will be one of the largest foreign communities in Europe. Ryanair is investing 200 million Euros to establish themselves in Faro and now has 28 routes! (14 new ones). Portugal is a good weather destination with 10 months of good weather, more blue flag beaches than any other country in Europe, low cost of living and it's easy and cheap to reach. A very important fact is the low density and high quality construction, furthermore it has fair plot sizes and property sizes are generous. The most important fact is that there isn't a glut of inventory available like in other markets. This perhaps is the main factor prices aren't moving a lot. The 'demand' is weak but so is the 'supply', so prices don't tend to have great variations.
Even in these difficult times with less property sales, the rentals have been a parachute for many home owners. There seem to be more long term lets available and short lets have proven to stay on a fairly high level during the main summer months. Basically, lower monthly mortgage costs and a fair rental income still cover a large chunk of the mortgage, keeping the property owners afloat.
For real estate companies to sell in these challenging times, is vital to work with vendors able to accept offers and drop prices to a reasonable level. For buyers, the deals are there - perhaps just not at the prices you were thinking of paying…
As a footnote, I'd like to mention that many agents have had a record month of enquiries over the last 6 weeks and that buyers seem to realize the deals are drying up.
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