Paul Ablett presents an optimistic view of the 2001 property market in Portugal. He concedes that the German and Dutch buyers will decline, but believes that UK and Irish buyers will continue to drive the foreign property market in Portugal.
The market has indeed been fuelled by UK property owners withdrawing equity from their existing houses in order to purchase abroad. House prices in the UK, in the more expensive regions are static and have fallen in some areas. It is true that interest rates are low, but so is inflation. Gone are the days when interest rates were 18 per cent, but inflation about 14 per cent, in other words negative interest rates.
The level of personal borrowing in the UK is at an all time high, much of it at credit card rates of up to 20 per cent per annum. The present government through its not so prudent chancellor is about to overspend his budget by £30 billion. This can only lead to higher taxes through increases in income tax, or more likely stealth taxes.
There have been very large increases in council tax. Government unemployment figures look low, but this is only because the government has been creating non-jobs, which other taxpayers are having to finance. Manufacturing industry continues to decline and job losses are increasing with many jobs being moved to the Far East. With regards transport, the railroads are inadequate, the NHS does not improve, despite money being thrown at it and education lags behind other developed countries. In all, a very bad scenario for the near future and one likely to discourage foreign property investment by UK citizens.
Add to the above the swingeing taxes being imposed by the Portuguese Government on offshore property companies and I can only foresee the future Algarvean property market in free fall. The AHETA believes that the Algarve will lose 400 million euros in foreign property investment.
Mr Ablett talks about restoring trust and confidence. How does he suggest this can be accomplished? In my experience, the Portuguese government has destroyed all trust and confidence within the period of a year. It will take a decade to rebuild confidence in the property market, unless these unfair taxes are rescinded. Investors will simply go elsewhere. They have killed the ‘golden goose’ at a time when they will receive a smaller handout from the EU because of the enlargement in 2004. Not a clever move.