Portugal and Spain – a game of two halves!
Andrea Kirkby prods around for the facts about these two property hotspots that have gone very, very cold.
T
he Iberian Peninsula has never quite hung together since the Romans left. That’s rarely been more visible than now, with the Spanish and Portuguese property markets enjoying markedly opposed fortunes – at least as far as prices are concerned. Spain is in crisis, with prices down 30
per cent or more from the peak – and still down 15 per cent from the start of 2008 – while Portugal has seen prices rise 1.5 per cent since then, according to
Findaproperty.com. Part of the reason for Portugal’s performance is
probably that it never saw the same boom as Spain – so it hasn’t seen the bust, either. According to the Instituto Nacional de Estatistica, Portuguese prices rose only 17 per cent from 2001 to 2006, while Spanish prices more than doubled. Doug Styles, director of Villas & Vacations, says,
“Portugal is really vastly different from Spain. Spain has been hit very hard by the fact that they’ve overbuilt, so demand is way down on the supply; we don’t have that situation in Portugal.” In particular, he believes Portugal escaped the “supermarket kind of selling” that affected Spain. Portugal is also a much smaller market. For instance while Spain gets 16-20 million visitors a year, Portugal gets only four million.
34 NOVEMBER 2010 PROPERTYdrum Stephen Anderson, MD of agent Infinito Real, says that Portugal
benefited by developers using their own resources rather than bank debt, whereas in Spain, many developers hit the skids when they were unable to repay bank debt, that hasn’t happened in Portugal. Consequently, there are few distress sales to depress the market. Where there are bargains, it’s where purchasers, who walked away when they were unable to come up with the completion payment, have left developers in the lurch. Because they’re retaining the defaulting purchaser’s deposit, they’re able to reduce the asking price by ten to twenty per cent.
developers hit the skids when they were unable to
In Spain, many
repay bank debt, that hasn’t
happened in Portugal.”
sTEPHEN ANdERsoN Md AgENT iNfiNiTo REAl
Nobody’s buyiNg… However, while Portugal has seen prices remaining relatively stable, the volume of transactions has fallen markedly since 2007. Doug Styles says, “We’ve been hit by the number of transactions falling; it’s probably 30 to 40 per cent of what it was – that is, a 60 per cent fall in volume.” Rural properties, he believes, have done even worse, with deals down by 70 per cent, while resorts and new developments have done rather better, or less badly at least. Things are starting to pick up, though, Stephen
Anderson says that enquiries have risen 17 per cent in the last four months and continue to rise.
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