While 2010 has been widely regarded as a poor year in the world of real estate, recent government reports and increased buyer confidence promise an upturn in the market, although the changes are not expected to be dramatic according to Stephen Anderson of Infinito Real.
“Going into 2010, the market was filled with uncertainty which was evident from the numbers of would-be buyers who either postponed their viewing trips or who just came over to get a feel for what was happening without any firm decision to commit to a purchase,” said Stephen Anderson, managing director of the Portugal-based group of property investors.
However, revelations such as the announcement by the Portuguese government that the tourism industry was responsible for generating revenue of nearly €6 billion in the first nine months of 2010, much higher than the figures for 2008 and 2009, show that perhaps the situation in Portugal is not as bad has had been suggested.
Cheap flights and the permanent presence at Faro airport by Ryanair has made the region even more accessible to visitors, which has helped to keep tourism levels up in the region with a knock on effect for property owners.
Stephen Anderson said: “Although rental levels have been lower this year, the occupancy has been relatively unaffected meaning that property owners have been able to cover their costs. This is likely to remain the same next year with perhaps an extra few weeks of rentals due to the additional flights now available.”
While tourists boosted the region’s economy this year, property bargain hunters have been left disappointed as buyers looking for slashed priced properties similar to those found in Spain have been left empty-handed.
“For us, the first half of the year was unproductive as many assumed that the reductions experienced in Spain would apply in Portugal but expectations were unrealistic with clients looking for 50 percent reductions on sea front villas, “said Stephen.
While buyers are unable to cash in on a potential crisis existing property owners are able to rest easy knowing that the value of their property is unlikely to go into freefall: “Of course there are still deals to be had but this is a small area and anything in a unique location will hold its value,” said Stephen Anderson.
The second half of 2010 saw an upturn in clients looking to seriously buy in the Algarve but external constraints continued to hamper buyers: “Clients had to contend with an increase in mortgage rates and a tightening of the lending criteria which are huge factors to take into account when buying abroad,” said Stephen.
2011 is expected to be a more positive year for the industry. However, Stephen is not predicting dramatic changes: “It is likely we will see more of the same, albeit with less drastic price reductions as those hit by the economic crisis have either sold up or walked away.”
He added: “Although prices will still be negotiable, there will be a more restrictive process hindering some of the previously available high loan to value deals and borrowers will also find that mortgage rates will have doubled in 12 months.”
With the New Year only weeks away, Stephen is expecting an upturn in prospective buyers coming to the Algarve in January and he suggests that buyers look to make a purchase in the first half of the year.
Stephen Anderson said: “This would be the best time to look as the talk of the Portuguese bail out, although nowhere near the levels of the Irish or Greek one, will be enough to delay some people’s decision making, offering some leverage when it comes to making a deal.”
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