SIMON PERKS | Property Comment
A confidence to purchase
By Simon Perks
Traditionally the majority of purchasers of second homes in Portugal , and particularly the Algarve , emanate from the UK . To undertake such a purchase an individual must have confidence in both their home market , from where their income originates , and the country where the property to be purchased is located . These conditions have obviously not existed over the last few years , indeed it is fair to say that the world , Eurozone and UK economies have been somewhat volatile , hence the second home property market in Portugal , and particularly the Algarve , has been very quiet .
Historically , economic cycles rotate approximately every 7 years . We are now , arguably , 4 / 5 years into an economic recession and there would appear to be signs that we are moving , albeit very slowly , out of the economic recession . At the time of writing Greece had agreed to stay in the Euro , a bailout had been agreed for the Spanish banks and both Ireland and Portugal were adhering to the terms of their respective bailouts . In the UK , the Bank of England had started to encourage banks to start lending to both companies and individuals to stimulate economic growth .
Portugal has a well regulated property market with regard to planning and development and as such there is not a vast oversupply of speculative properties , as there is Spain . As a consequence Portugal , and particularly the Algarve , has a well-deserved reputation for quality and exclusivity with purchases being made for reasons of life style rather than purely investment purposes .
The Portuguese authorities , the major resorts , developers and the banks have all recognised the prevailing circumstances and are aware they are in a good position to start taking initiatives that will allow them to promote the Portuguese second home market , particularly to the UK , to give individuals the confidence to purchase .
Encouraged by these initiatives , Boavista Golf & Spa Resort has recently commenced the construction of four properties and is about to start work on another further four . Philip Pope , managing director comments “ in spite of austerity measures and the bad economic climate , Boavista is seeing a slow return to the touristic property market . Clients are cautious , take their time in making a decision and are looking for value for money . Without question clients expect a discount and / or a giveaway but are showing genuine interest in properties on secure , well maintained developments that offer facilities and services , such as Boavista ”.
Monte Rei
Another important factor that determines whether individuals buy is the exchange rate . Over the last year GBP has appreciated by some 12 % against the EUR and a number of foreign currency experts are predicting a GBP / EUR exchange rate of 1.30 by the end of this year with the rate being maintained as it is felt that this is its natural level . This would obviously be of benefit to any purchaser from the UK . In addition it is predicted that interest rate for both GBP and EUR will continue at , or near , their current levels for the foreseeable future .
In conclusion the property market in Portugal , and particularly the Algarve , is very quiet , with prices in some areas having fallen by as much as 30 / 40 % from their peak of 2008 . In other areas prices have held up but this is partly the result of a lack of transactions . However it would seem that Portugal due to various initiatives and forward thinking will be in a good position to take advantage of any upturn in the market , occasioned by any economic improvement ”.
Simon Perks - Perks Property Finance Solutions Limited + 44 ( 0 ) 7389 0567 + 44 ( 0 ) 7780 501548 email : simon @ perks-pfs . com
58 | Summer 2012 | www . portugal-life . net |