A recent survey into the Algarve property market revealed that 92% of leading agents in the region reported higher confidence levels and a growing trend to market stabilisation.
The Algarve market continues to be positively impacted by key developments: the return of the core British market, new emerging markets driven by favourable and innovative legal and tax structures, increasing availability of mortgage financing and a destination product proposition that is now highly price competitive.
The study, ‘10-10-10 Algarve Residential Tourism Survey 2013’, found a positive mood in the market and that activities of ‘bargain hunters’ had dropped considerably in the first four months of the year. The research also found that enquiries, offers and transactions were all up.
The latest survey was completed in May, covering the first four months of 2013, researching market confidence, performance and trends in the market. Data was gathered from 10 leading real estate agents in the Algarve.
Interest from ‘end users’ is continuing to increase, accounting for 80% of all enquiries. Villas and apartments are still the most popular property types and 77% of respondents reported enquiry levels up.
Vendors’ asking prices are starting to reach levels that would attract buyers in the most popular areas. Asking prices on the coast and in large scale developments seem to have stabilised, whilst all other locations and areas again experienced a reduction of between 5% and 10%.
Growing sales volumes are fuelled by a returning traditional British market, complemented by buyers from emerging markets stimulated by new innovative tax and legal structures. The British accounted for 55% of purchases, the Swedish 10% and the Russians and Chinese achieved 15% between them, indicating that the Golden Visa Scheme and the Non Habitual Regime are probably stimulating demand.
Overall, 47% of respondents reported that the number of completions was higher in the first quadrimestre of 2013 with only 15% reporting a fall.
The higher end of the market in product type and price point appears to be more active – detached villas represented 46% of all sales and volumes were up by 17% compared to the end of 2012.
The inclusion of higher value, large scale integrated golf and beach resort developments in the survey has led to some interesting results, with 21% of sales being over €2 million, 11% between €750,000 and €2 million, 33% between €250,000 and €750,000, and 35% of sales were below €250,000.
The trend to market stabilisation noted during 2012 seems to be continuing in 2013, evidenced by no change in prices for apartments on the coastal strip and prices for stand-alone detached villas decreasing by just 2%. Comparatively, prices for detached villas and mansions in recognised resort developments increased by 8% and 5% respectively, albeit a much smaller market segment.
The dominance of ‘end user’ purchasers continues as speculators move out of the market, and the number of properties bought as a holiday home increased again during the first quadrimestre of 2013 compared to the end of 2012, accounting for 42% of all purchases.
Other key purchasing motives remained stable with primary residence and retirement-related buying again accounting for nearly 40% of transactions.
As in 2012, apartment and villas formed the majority of new vendor instructions, and in terms of geography, the supply of properties coming onto the market in remoter locations and north of the EN125 remained steady at 13% of the total; however interest in these areas is negligible.
In terms of lead generation the internet is a very important part of the vendor market’s business strategy, accounting for 27% of all leads. Walk-ins and word of mouth account for 50% and 18% are generated by overseas agent contact.
Andrew Coutts, CEO of ILM Group, a partner in the survey project along with Property Lynx, believes the government has played a key role in this new interest in Portugal’s property market through its Golden Visa Scheme, and another advantage is the fact that there is more credit for property investment.
The 10-10-10 Survey is carried out three times per year and the next will be completed in September with results available in October.