Portugal property prices have shown further falls according to the Royal Institute of Chartered Surveyors and Confidencial Immobiliario
Portugal property prices have shown further falls according to the Royal Institute of Chartered Surveyors (RICS) and Confidencial Immobiliario (CI) who recently conducted a survey on Portugal residential property prices. The survey has shown a further fall in prices, rents and future transaction expectations.
Continued low demand and confidence caused during the problems of Portugal’s financial crisis, which it seems unable to shrug off, is further affecting its impending austerity measures and taxation problems.
The survey shows that the price declines continue to be driven by falling demand since December 2010. Additionally, residential developers on the whole are reporting less severe price declines than sales agents. This suggests the market for new build, whilst still under pressure, is holding up slightly better than for existing stock.
The national confidence index, which is a composite measure based on price and sales expectations, rose by one point from -54 to -53, but remains fairly negative overall.
RICS senior economist, Josh Miller says, ‘In Portugal, house prices continue to fall due to very weak demand. Demand weakness, in turn, stems from a deteriorating labour market with the unemployment rate now standing at 16.3% and falling mortgage lending.’
Given tight mortgage lending constraints, households have been turning to the rental sector over the last year, although this month’s results indicate the exodus from the sales market to the lettings sector may be coming to an end,’ Mr. Miller explained.
CI spokesman, Ricardo Guimaraes, said that some estate agents are naturally very pessimistic, especially due to banks’ distressed residential selling activity. ‘But others are taking a more positive view on sales market developments in 2013, on the back of expected improvements in credit conditions,’ he added.
Added to this survey comes further bad news for the property market in Portugal: more than 735,000 domestic properties stand empty due to overbuilding and the economic crisis, which has left several housing projects finished and habitable but still empty.
In the last decade, according to the 2011 Census carried out by INE (National Statistics Institute), numbers of unoccupied houses increased by 35%. Also around 1 million new domestic properties were constructed and the economic crisis has left around 125,000 of those uninhabited.
This leaves investors in a quandary. Whilst Portugal is a great place to live, especially in the Algarve with over 300 days of sunshine per year, is it a great place to invest?
For a quick killing – not at the moment. However, for a cash buyer looking for a long-term return, there is more choice possibly than in any other country in Europe. So it is a buyer’s market, but you may, even now, still have to take a loss before seeing a return.
Furthermore, with 735,000 empty properties, there are definitely bargains to be had. Speaking to banks about their repossessed stocks should be the first move for any savvy investor interested in Portugal.