Portugal has always been a favourite with the Brits; you can get a low cost flight there and there is the lure of the beaches and the cafe culture. Despite general economic turbulence my findings are that there are still buyers looking to buy 2nd properties in Europe. So why Portugal? Well, it’s been a stable market for second home property investment for many years. Also there has been continued high levels of investment by the Portuguese government and established property development companies in infrastructure and leisure facilities, making property investment in Portugal a safer strategy even in these challenging times.
Portuguese mortgages continue to be available and non residents can borrow between 75%-80% of the value of the property thereby reducing the exposure to the currency exchange rate. Portuguese banks are capped at a very low rate of 0.5% by law for redemption charges on acquisition mortgages, this allows the luxury to repay the mortgage at a time when the Sterling exchange rate has improved against the Euro thereby making the acquisition even better value. In terms of location, interestingly it seems, buyers are tending to focus on the more established areas of Almancil and its environs, Carvoeiro, Lagos and Praia da Luz which remain fast favourites for overseas buyers, and the area around Aljezur. This latter location offers value properties in countryside locations which are particularly popular with the northern Europeans. It appears that Portuguese property values have not fallen as far and as quickly as in other European markets e.g. the UK, Ireland, Spain and Germany and this, I think it fair to say, has traditionally been the case in past recessions. This to my mind makes Portugal a more stable investment over the longer term.
However, vendors are more realistic about the forces driving the market these days and recent price reviews show a level of price correction and in some individual cases this has resulted in some great opportunities for cash buyers or those with mortgages already approved. Buyers must also be aware of local market forces and understand that typically vendors in Portugal have higher levels of equity in their properties and are not facing the same pressures as vendors in other markets.
*A Question and Answer list about buying property in Portugal is available from Chris by emailing firstname.lastname@example.org or call 01603 700007