Market still weak in Portugal
Property sales are continuing to fall in Portugal although estate agents and developers are finding a less severe pricing environment in the country’s real estate market, according to a report published today (Friday January 28).
Confidence though in the market is subdued, the December report from the Royal Institute of Chartered Surveyors shows.
The Lisbon Metropolitan Area (LMA) and Oporto Metropolitan Area (OMA) encountered a less severe pricing environment compared to November, but the Algarve did not.
The relative improvement in the pricing environment during December can mainly be attributed to the fall in new instructions to sell property that was concentrated in the LMA and OMA regions.
New buyer enquiries continued to fall sharply, but less so than in November and this was evident across all regions covered in the RICS/Ci Housing Market survey. And the transactions picture continued to deteriorate, with more respondents reporting falling rather rising than sales compared to November.
The RICS/ Ci Activity Index dropped further in December, from –27 to –32, but the RICS/ Ci Confidence Index improved slightly from –44 to –35. Crucially, both indices remain in negative territory, indicating that activity is still falling and confidence is still weak, said RICS senior economist Josh Miller.
‘Agents are concerned about the impact of credit constraints on activity and prices. They are reporting that banks are lowering loan to value limits and lowering valuations, causing many potential buyers to cancel deals. At the same time, new mortgage rates are rising, which is further weighing down on demand and prices,’ said Confidencial Imobiliário spokesman, Ricardo Guimaraes.
The report is the most reliable available on the property market in Portugal. Confidencial Imobiliário is an independent company dedicated to supplying real estate market professionals with the statistical information required for their investment and strategic decision-making.
Ci specializes in producing market intelligence indicators, indices and exclusive databases on the housing market, covering both supply and transactions, typically in high geographical detail. One of its main products is the Index Ci, which is the most referred to house price index in Portugal. Given its credibility and independence, the Index Ci is used by entities like the European Central Bank, the Bank of Portugal and the Portuguese Government.
I simply take these property markets reports with a pinch of salt, and recommend readers do the same. Each report writer has a vested interest and it's not difficult to spot. Before buying in any market you MUST do your research from several sources. There is no short cut. You must understand the relationship between the seller and the agent. How much does the agent get. It's not always a percentage. The owner/seller is not always informed what the achieved selling price is. I KNOW YOU DONT BELIEVE ME, thats why you are going to get burnt. Trust no one. Read everything.
It's very unfortunate that the world has seen a property value downturn however I think for the Portuguese market it is inevitable. It seems that the majority of Portuguese sellers are reluctant to reduce their prices and are therefore creating a stagnant market. Once the sellers realise that there are many other places that investors can park their money they just may decide to reduce their property prices in line with the true value.
Portuguese property is good value for money, however across the board prices still need to fall by around 20%.
Im not finding this to be quite true, I run a rental cottage business and this year has seen a large upturn. The vast majority of my business comes from househunters from the UK and we are very busy, other local Estate agaents I talk to all also report a good unturn in business and sales…
nonsense!