Property prices in Portugal are falling due to lack of demand, according to real estate agents but there does seem to be an increasing interest from overseas buyers looking for bargain buy to let investments.
There was a further deterioration in demand, supply and confidence in the Portuguese property in October according to the latest Portuguese Housing Market Survey from the Royal Institution of Chartered Surveyors and Confidencial Imobiliário.
It shows that the National Confidence index fell from -53 to -60 and the National Price balance improved marginally from -65 to -64, but remains deeply negative.
Price declines continue to be driven principally by falling demand, the report says.
‘Indeed, rising supply is not presently an issue, with new vendor instructions falling consistently this year,’ it adds.
Until September, developers had generally been less negative than agents. However, the October survey provides further evidence that developers are now becoming less resilient to adverse market conditions and for the second consecutive month developers reported roughly similar price expectations and falls in prices.
However, real estate agent Infinito Real says that a surge in tourists over the summer is now having a positive effect on the Algarve property market with the number of bookings to view properties three times more than November last year and the number of clients booked to visit in December up ten fold.
Indeed, managing director, Stephen Anderson, said he has increased staff levels to cope with the extra demand.
‘October and November are historically busy months for Infinito Real with bookings usually made by tourists returning to the cold UK after their summer break and contemplating purchasing a second home in the sun,’ he explained.
‘What’s unusual this year is that booking levels are such that we are busy right through December, even over Christmas, which is traditionally quiet within any property market. In the last month I have taken on four new members of staff to ensure we are able to continue providing a personal service for those coming over to view properties,’ he added.
In contrast to previous years, bookings are predominantly investor orientated rather than the usual holiday home enquiries, he has found.
‘It would seem that, aside from the typical investor, other visiting tourists are starting to realise the rental potential over here and considering buy to let over other forms of investment,’ he said.
According to Infinito Real, it is the cheaper properties sitting at around £100,000 to £150,000 mark which are attracting most interest rather than the £200,000 plus properties of previous years.
‘There has also been a few exceptionally cheap repossessions from the banks offering 90% mortgages with a 1% spread which have been snapped up within hours and buyers don’t appear overly fussy about the location provided the price is right and the rental income is achievable,’ explained Anderson.
‘Cash investors are seeing fantastic value in taking out a small mortgage on their purchase, which is easily accessible due to the low loan to value require, and then taking advantage of opening a savings account offering 5% interest per year gross which is guaranteed up to £50,000 per person, something which is rarely available anywhere else,’ he added.