News - Algarve Summer Property Update
Algarve Summer Property Update
Read our market report and property update for Algarve property.
As we enter the peak Summer month of August, and many of us are thinking of our holidays and taking time to reflect on the rest of the year, it seems like a good moment to summarise the comings and goings in the Algarve property market.
If I look back a year to Summer 2011, the IMF had just confirmed an aid package to Portugal, and the euro was trading at 1.15 to the pound sterling. Finance was difficult to obtain for purchasers, and the market was price sensitive.
So, what has changed in 12 months?
The IMF aid package is well established, and Portugal is consistently achieving the fiscal targets set, and receiving further fiscal aid. Taxes are higher and many "forgotten" taxes are now being updated or simply correctly collected, ensuring a steady tax income in the future for the economy. Tough for those of us who live here, but the signs are that things will only get better, although not at any great speed.
The euro has been quite volatile in the last year and is trading at 1.26 at the time of writing, a difference of 10% in a year. This is a double edged sword, as whilst buyers from the UK get more for their money, vendors wishing to return to the UK are getting less. Of course, for those within the euro zone this makes little difference to them.
Finance for a property purchase is still close to impossible, and in our experience the only way to obtain finance is to use a mortgage broker with local knowledge. We have seen many people with "pre-approved" mortgages or hollow promises from local banks who have subsequently failed to achieve any financing. If you really need to borrow, make sure you get honest advice, and do your homework before looking at properties.
Pricing of properties has never been more important than it is in the current market. Today´s savvy purchaser has a wealth of information available and they are doing their homework. Overpriced properties are stagnating, and vendors who do not respond to the market conditions will be left behind. However, many of the vendors in our sector of the market do not have to sell, but want to sell. We are seeing an increasing trend for vendors to remove their property from the market, and wait for a recovery before offering for sale again.
The properties that are selling are generally in the sub-€500k sector of the market, which is no great surprise.
We are finding that the same questions/comments arise time and time again, so it seems worthwhile to share a few of these (and our replies) with you.
1. But in Spain everyone is desperate to sell their houses and prices are so cheap.
We aren´t in Spain. We don't eat paella. We don´t speak Spanish. It is a different country, with a very different economy and economic issues, it just happens to be next door to us.
2. Everyone must be desperate to sell at the moment
Not everyone. Some people are desperate to sell however many vendors are now deciding they don´t want to sell at present. There are some bargains (for example) in the over supplied parts of the market. Want to buy an apartment on a resort? You will find a bargain as there are many for sale, including repossessions
3. All the properties are too expensive
Really? Based on what? Land and construction has never been cheap in the Algarve, and even in these times is not getting any cheaper. When the residual values of properties are high, vendors will sit on them (unless they need to sell)
4. I am a cash buyer the vendors should be falling at my feet
Well, no. There is only one type of buyer at present, and that is a cash buyer. Everyone is a cash buyer as those needing finance are not considered buyers until they are ready to proceed
5. My friend/Mum/Psychic medium said that Portugal is going to leave the Euro, so all the prices should be cheaper.
Maybe, more likely not. Portugal has done a good job of tidying up it´s act fiscally (it´s not easy to please the IMF) and is showing no signs of leaving the Euro. In any case, the market will react to this if it ever happens, not before.
So purchasers should do their homework and be realistic about what they want. I will reiterate our previous advice: Do not waste your time looking at properties that will never come in to your budget; brief us with regard to your budget and we will suggest properties that you can buy, not just dream about. We have a pretty good idea of how flexible our vendors are, so be straight with us and we will suggest realistic properties for you.
So, if you want to bag your self a bargain in the Algarve this year, then decide what your criteria are, organise your finance and choose a good estate agent to work for you (we know a good one if you want a suggestion!). There are deals to be done, so be up front and honest about your requirements, and you have the best chance of getting the property you have been dreaming of for the best price possible.
If you are selling, then you know that we are about to enter our busiest period of the year, so now could be the time for a price review.
And if you have bought already, and are looking for someone honest, trustworthy and who provides a quality property management and maintenance service, then let us know and we will see if we can help. Have a look at some of our recent projects here: https://picasaweb.google.com/115833939360482381618/RenovationAndConstruction?authuser=0&feat=directlink