Algarve market “in recovery” as brits go back to beaches
Indeed, asking prices of property on Portugal’s south coast stabilised last summer, according to real estate consultancy ILM.
“There is no doubt that the market is emerging from the doom and gloom of recent years. Our last report of 2012 suggested that the Algarve market had hit the bottom and I think that is more obvious this year,” the report’s co-author Andrew Coutts told OPP Connect.
Photo credit: Melenama
The positive signs arrive despite wider economic problems across the country. Even within the Algarve there are unfinished developments which were hit by the recession.
But something seems to be changing.
David Westmoreland, Managing Director of agent B&P Properties, told OPP that sales have been improving in the last two years: “This year we’ve already completed the same volume of sales as we did in the whole of 2012.”
He attributes the growth to “a combination of things”: “For a start, people are accepting that the Algarve is a viable market – this is the way it is. There’s a sense of ‘you can’t put things off forever’. Some people have waited five years to make a move and are sick of waiting. Also, circumstances in other markets have an effect on us. For example, there are issues with tax break laws in Scandinavia, making Portugal more appealing to the Scandinavians.”
While financially confident Scandinavian buyers are stepping up activity, Brits have returned to the market significantly, accounting for 55 per cent of sales. At the same time, investors from further afield are also starting to pay attention. The government’s recent Change in the law to introduce the Golden Visa to non-EU buyers offers residency for those invest a minimum of €500,000 - a move that has spiked interest from Chinese and Russian buyers.
The ILM survey follows a RICS/Ci market report from May, which found that sales expectations had turned positive for the first time since September 2010, while new instructions also turned positive for the first time since October of the same year.
There were “more grounds for interpreting the current trend in the data as something more than noise”, the report argued, with the national confidence index “improving markedly” over the preceding months.
RICS Senior Economist, Josh Miller said at the time: “The April survey results point to further early signs of stabilisation in the sales market. However, at this stage we would caution against concluding the market has definitely turned a corner; prices are still falling and the broader economic backdrop remains very weak, with unemployment at 17.5%. Meanwhile, activity in the lettings market appears to have run out of momentum.”
Fast forward a few months and sales have increased in the south of Portugal, with 47 per cent of ILM’s respondents reporting a higher level of completions compared to Q3 2012.
“People always wait for a bubble to burst, but things have been gradually getting better over the last 18 months – in sales volume, website hits, enquiries and market confidence,” added Westmoreland.
Coutts concluded: “What is clear now is that the recovery is spreading – affecting not only the more high-end areas and developments, but moving into the east and the west.”