2014 and the beginning of 2015 has seen the Euro fall against the sterling pound and the dollar. Though these rates will greatly affect those wishing to enter the UK market from Portugal, from a British or non-european perspective, this news will come as a delight to anyone looking to buy into the European market.
After a lengthy period of economic instability, both contributing and, at the same time, running in conjunction with an extremely lethargic housing market, Portugal has seen a much steadier patch of growth and a newly found stability in the housing market over the past 12 months. From a Real Estate point of view, the period of 2008 - 2013 is one that many will wish to forget, and for all those who had been hoping (or even needing) to sell property during this period, I would expect that they will certainly have shared in the less than optimistic sense of ‘O Fim’ (the end).
However, times are changing and spirits are lifting, and almost out of nowhere ‘the end’ is now looking like ‘the beginning.’ This period, as expected, bought about huge reductions in the value of property, often to levels below Portuguese bank valuations; something I had never witnessed previously or had even dreamt would happen here in my life time. Having grown up here, it still surprises me how stagnated a country of this beauty and good spirit could become, yet it is these exact traits which are leading Portugal, and its housing market, into the future.
The decreases in property value have hit a point of natural stability, something which was even visible this time last year, but was nevertheless a bold claim to make at the time. ‘The Telegraph’ did actually go ahead and publish this notion back in February 2014 (http://www.telegraph.co.uk/finance/personalfinance/houseprices/10610512/House-prices-in-Portugal-Algarve-property-shows-signs-of-turnaround.html), and I now feel comfortable agreeing with this article, having seen the change in attitudes and the housing market first hand out here in the Algarve.
This lowered property pricing, taken into account with the decreased value of the Euro, a decrease which is not expected to continue further, or if so, only by €0.01/0.03, comes together nicely as a sort of ‘discount package,’ but only as long as the Euro stays at this level alongside current house prices, before market confidence brings about slight increases in the offers needed to buy. The large increased sales in the Algarve have boosted optimism, and it feels like a buzz is beginning to grow out here. Though no one should expect the madness of the late ‘90s and early ‘00s boom anytime soon, its good to see buyers getting good value, and for sellers to actually be able to sell their properties, and not necessarily even for the lowest sum they would have desperately taken at one point. With competition growing for properties already, where once last year a buyer could be the sole interested party, the housing market is looking promising. Just today I looked at an old friend of mine’s house that was sold for over €500,000 euros back in 2006, which is now on the market for €350,000 8 years later. It makes little sense but that is the reality out here for the time being, with property in the Algarve now being on average over 32% cheaper than the UK.
Overall the Portuguese property market is once again open for business and it feels great to be back out here. With lowered valuations and 5%+ exchange rate “discounts” compared to 18 months ago, it’s looking like 2015 is going to be an even better year for the Algarve than we experienced through the course 2014.
Happy New Year everyone!
Posted on Friday, January 9, 2015