Real estate market hit hard by crisis.jpg

Real estate market hit hard by crisis

SECOND HOME sales are slowing abruptly in Portugal as a result of falling demand caused by concerns over the current financial situation.

Classified by the Portuguese government as a strategic product, residential tourism has been one of the segments most affected by the international economic downturn with effects being felt almost immediately.

“We have registered a decrease in demand for second homes,” says Eduardo Abreu of Neoturis, whose opinion is in line with other property sector analysts.

Although there are no official statistics, most real estate companies dealing with the second homes market agree that sales have fallen considerably in relation to previous years, both in Portugal and Spain.

Less visitors

The autumn 2008 report ‘Marketbeat’, published by Cushman & Wakefield, states that “since the beginning of the year, the majority of developments have suffered a considerable reduction in the number of visitors with sales being far from what most promoters would have desired.”

Second home demand in Portugal is intrinsically tied up with the residential tourism sector projects since these are the main suppliers of the market.

The contraction of markets in two of Portugal’s main target countries – Ireland and the United Kingdom – explains, to a great extent, this collapse in demand.

“Market realities have changed and investment from two of Portugal’s main sources of second homes, the United Kingdom and Ireland, have dried up as banks there make mortgages more difficult,” explained Paulo Sousa, the Real Estate Financial Director at Caixa Geral de Depósitos during a conference organised by the magazine Vida Imobiliária.

Eduardo Abreu has no doubts however, that the contraction in the Portuguese market results from a number of different factors and that it “could last between three and four years”.

“In the last 30 years, the number of properties sold to foreigners in Portugal has stood at around 80,000 houses, while in the next few years the number of properties available for sale will stand at around 250,000 properties creating a glut of vacant properties that no-one wants to buy,” he warns.

In other words, the property market here, as in Spain, made projections for growth in the good times that clearly have fallen well short of the actual market demand situation.

Do you have a view on this story? Email: [email protected]