By Bart van Linden [email protected]
Bart van Linden is a director of Exclusive Algarve Villas, a local real estate company focused on selling high end properties and investment related real estate throughout Portugal.
Since the bank crisis started late 2007 with the crash of Northern Rock, we couldn’t have imaged that now, in 2012, the banking problems would not have been resolved. Furthermore, they are still changing the economic landscape.
The shortage of money in many European economies has become a problem, not just for companies to obtain financing to grow, but also for the real estate markets. Countries which have received bailout packages from the IMF, like Portugal, are paying a higher rate on the market for their financing.
This rate is carried through to the end customer via the banks at the moment.
Some banks have now released extra funds to put back in the economy, at a lower rate, to stimulate companies to invest again and get the economy going.
What does this all mean to you as a resident or foreign buyer in comparison to, say, 2006?
Well, the banks were giving (almost) free money to any buyers with 90%-100%-110% financing with a fairly easy approval process.
This has changed and banks are stricter with approvals, the percentage of financing and valuations. One good thing is that Portugal didn’t have a real estate bubble like Spain, hence the fact that real estate prices have been stable (individual situations taken aside).
For buyers looking to obtain financing, they will need to take into account to have a 30%-40% capital available to negotiate good terms and a low spread with the bank.
For any client who would want to invest in Portugal, we would advise to do the homework first and get a loan pre-approved by a mortgage broker/bank before shopping for houses. Once your budget is established, then contact your agent and find your home under the sun.
One thing that we have noticed in the last three months is that there are fewer villas coming onto the market.
Many buyers are simply not prepared to take a massive hit on the price to sell their property. This could be one of the early signs that the markets are stabilising.
One thing is for sure – there are deals to be done at amazing prices. It might take some time and work to find them, but they are definitely there!
To contact Bart van Linden from Exclusive Algarve Villas, please call 282 353 019, 912 826 969 or email [email protected]. Alternatively, please visit www.eavillas.com
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