by Chris Graeme
A large number of home and land owners handed over their property to banks because of financial difficulties last year. The total stood at 6,900 properties and plots, almost 18% up on 2010.
The figures, released by the Portuguese Association of Estate Agency Firms and Professionals (APEMI), show that, on average, 19 properties were handed over every week to the banks to pay off the credit given to purchase them.
A record number of keys were handed back in December (1,100) in what was a “particularly difficult second half of the year”, according to APEMI’s president, Luís Lima, in an interview with the business daily Jornal de Negócios.
And the hand-backs made by real estate developers showed that the property crisis in Portugal had reached new and alarming levels.
To clear their books of vacant handed back properties, the banks are increasingly selling them off at auctions for knockdown prices, offering easy credit options. Many of the properties are bought to rent out.
Last year, thousands of properties came onto the market via two specialised auction companies in the sector: Luso-Roux and Euro Estates with over 20 auctions, 650 lots at a value of over €40 million.
Euro-Estates undertook 11 auctions with 700 properties all over the country. On one weekend alone, May 21-22, 95 properties and 10 shops went under the hammer.
At the same time, the tax authorities ordered a million bailiff actions last year – an increase of 30% on 2010.
And the National Association of Small and Medium Enterprises estimated that 213,000 companies had financial and tax problems and were facing 400,000 bailiff actions.
In the past few years, an increasing number of builders, construction companies and property developers have been unable to either complete or sell their finished developments because of the crisis in what has become Portugal’s own Spanish-style property bubble.
In 2011, property sales reached their lowest recorded levels since 1980 with 194,000 transactions, 7.2% fewer than in 2010 and a fall of 20% compared to 2008.
The construction industry in Portugal fell 9.7% in October compared with September 2011, the second biggest fall among European Union member states, contracting 11.3% on the same month in 2010.
The Algarve was particularly hard hit, traditionally relying on the tourism-based construction industry for employment.
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