Algarve property market showing improvement

There was good news and bad news for the Portuguese property market in the latest Royal Institution of Chartered Surveyors/Ci (RICS) Portuguese Housing Market Survey.

However, according to the statistics, the Algarve looks to be moving to come out of the housing market crisis.

In the Algarve region, the residential property market was found to be bucking the trend experienced in the rest of Portugal, with falling prices slowing in the region while in contrast price falls in Lisbon and Porto accelerated.

Although sales expectations continue to be negative across Portugal according to the statistics, the Algarve has seen an improvement in this area with figures almost levelling out to neutral and indicating a move towards an improved market.

According to the July report, both the national activity and national confidence indices improved, however the weak demand for property continues to be a factor in keeping prices down.

The national activity and confidence indices increased by 16 and 11 points respectively, but the national price balance dropped from -48 to -55.

Josh Miller from RICS said: “In Portugal, it is the demand side of the equation that is weighed down on prices. Indeed, the double digit unemployment rate is feeding through to weakness in new buyer enquiries.

“Unlike in Spain and the US, oversupply is not an issue in Portugal. The official statistics show no evidence of overbuilding prior to the economic downturn and new vendor instructions have been falling all year. Therefore, once the economy starts to recover, Portugal will not have to cope with the residential inventory issue that other countries face.”

While residential sales remain limited, the change in the market has seen a boom in rentals.  Confidencial Imobiliário (Ci) spokesman Ricardo Guimarães said: “Survey respondents note that limited residential sales are due to tight credit constraints and the government’s fiscal austerity measures which are reducing family’s incomes.”

He added: “Because of the difficulties buying a home at the moment, many families are instead turning to the rental market, which is experiencing a boost in activity.”