2017: property market overview
The real estate market dynamics in Portugal is recovering and has already increased significantly on last year’s figures. According to the Portuguese Real Estate Professionals and Brokers Association (APEMIP), it is estimated that there will be a 30% increase in property sales in 2017.
At present, Portugal is in a unique position, offering political and social stability to foreign investors. Though an important factor, it is not the only one.
The recovery of the property sector would not be possible without the reduction of interest rates on mortgages, which are now historically low. According to the National Statistics Institute (INE), interest rates on housing loans have been decreasing for the past 13 months (the lowest since 2009), which has been a good incentive for the Portuguese buyer.
In addition to these rates, bank spreads are also being successively cut, which implies not only a decrease in existing credit charges but also an improvement in the conditions offered for new operations (eight national banks have minimum spread margins below 2%).
For Casas do Barlavento, UK buyers continue to be the majority (45%), which contrary to expectations – with Brexit, the recent elections, social instability and GBP value – surprised the market with an increase in demand. This was possibly due to some buyers wishing to invest in the eurozone; the loan opportunities offered by Portuguese banks; a higher property taxation in the United Kingdom and unattractive interest rates in British banks.
The Swedes (24%) and the French (15%) are also increasingly seeking their place in the Algarve sun and taking advantage of the tax benefits offered through the Non Habitual Tax Residency scheme, which is based on the exemption of the international juridical double taxation of income from foreign origin to pensioners and retirees.
Finally, largely due to the Golden Visa programme and quality of life, Europeans and non-Europeans have also started looking for real estate to invest in the Algarve (16%).
This quick shift in the property sector means that it is becoming difficult to keep up with the growing demand for home acquisition: “We had been waiting for this turn in the market for a long time, but I can say it has come and is all happening fast. We are noticing that we are not getting enough product in to satisfy demand,” says Paul Cotterell, sales director at Casas do Barlavento, a real estate business operating in the Algarve for 15 years.
By CASAS DO BARLAVENTO