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Portugal Takes The Strain From Spain
January 20, 2010Article by Ray Withers
Portugal property agents have held a big meeting recently to determine how they could bring increased activity into the market in 2010, without the cooperation of developers who still refuse to discount prices.
However, UK based agents have been reporting some solid increases in activity and sales of Portugal property since the second half of last year — perhaps that is why developers won’t cut prices; because they don’t need to.
There is no doubt that Portugal property has seen its popularity with British buyers increase massively since it became clear that Spain’s boom had most definitely turned to bust.
It is little wonder: the Spanish economy has completely collapsed and there is still the possibility that is will be forced to go to the International Monetary Fund for the equivalent of a crisis loan. That is before we even get started on the property market, which has collapsed just as violently and is actually mostly to blame for the economic crash.
Meanwhile the Portuguese economy came out of recession along with much of the rest of Europe in the second quarter of last year. The economy grew 0.5% between the first and second quarters, and then 0.7% between the second and third.
Portugal property prices are also on the rise. According to the Knight Frank second quarter index prices rose 1.7% between the first and second quarters — the tenth biggest rise of all the countries in the index. Portugal’s 3rd quarter performance was slightly less impressive with flat quarter on quarter growth, but prices found to be just 0.3% lower than the previous year.
Little wonder that Brits are currently shunning their long-time favourite (Spain) in favour of Portugal, says David Cox, director of international property investment consultancy Property Frontiers.
“Portugal is by far the least risky of the two markets, and if there is one thing the current buyer is that is risk averse. We are seeing the wealthy lifestyle buyers and casual investors returning to place in the sun-seeking. Those who would normally choose Spain are now looking at Portugal as the closest but far less risky alternative,” he said.
It is true that Portuguese property developers are not very willing to discount prices as such, but they are laying on some excellent incentives to buy.
Take the Academy Villas and Apartments in the Algarve’s Vale Da Pinta currently being marketed by Property Frontiers. The price is a 20% discount on its peak value, and 100% LTV mortgages are available. The development is located ona world class Algarve golf course, but offers 1 bedroom apartments from just £100,000.