sir recorder

I predict, with the significant drop in value of the Euro versus the Pound Sterling, now edging towards £1 = €1.25 that holiday apartments their prices will rise this year. Maybe the property recession will end. It's been down for 3 years now.

As the baby-boomers (of the 1940s/1950s) in the UK start to retire in ever increasing numbers, the market for retirement homes has to grow again. House prices have risen in UK, so these guys have got more money to spend than before.

Hayles

It's a nice thought. But a bit over optimistic.

sir recorder

House prices have been down, because a lot of expats have sold up (or have put their holiday homes up for sale) and want to move back home, being unable to afford the increased prices here in PT. Now the Euro has dropped against the pound, the pressure to move back home to UK is off.

So the way forward is up. Not "optimistic", but stands to reason. It's the economic direction in which these things move.

Big Ant

Banks are sitting on loads of RE, and have clients waiting to unload. We meet our Bank Manager regularly to discuss the repos, as well as pre-repos, as the clients are on their knees.

Rental income for 1-2 bed flats is such a low yield, not worth buying at any price, and renting as a 'B2L portfolio'.

Thousands of empty flats, more new builds in Tavira underway - crazy - it would be hard to price anything as a buyer.....think of a low number, halve it and start there !

There's an auction today 3pm in Porta Nova hotel, where a builder owns a block, none sold. I'm guessing he would sell at EUR 40-50k / 100 sqm unit, as a bulk buy....just to walk away...just to stop the pain.

EUR.....1st country to exit, will be followed quickly by collapse for Portugal, and we all switch to Escudo, and see house values reduced by 70% overnight. Restrictions on flight to safety, would stop us accessing our Current & Deposit a accounts. VPs from our bank refused to confirm to me, whether my EUR deposit would remain in EUR, or be switched to Escudo. Borders would be closed, while everything stabilises.

Over time - many years, Portugal would seem cheap if priced in Escudo. But....EU is broken economically, so traditional demands from Northern Europe, Scandinavia.....will take years, decade plus.....to return to pre-2008 levels.

Enjoy the sunshine, diversify your assets...but house prices......still going south !

Big Ant

Hayles

Agreed Big Ant. Portugal (like many other countries) has yet to hit the bottom of this cycle. There is no quick way out. It is an economic cycle which is going to take sometime to work through.

People are more cautious than ever and will hord cash in banks rather than take the risk of buying properties whether overseas or in the UK.

As Big Ant says there is plently of vacant property available. Until these units are sold or demolished prices will continue to reduce/stagnate.

In short "the only ways is up" is on hold for quite a while yet.

tombo

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A prophesy of doom!
But should this happen what a great opportunity if one is young enough and has some spare capital and prepared to stick it out----to buy then.

pickardj

Having just bought a house, and speaking as someone whose income is fixed in pounds sterling, I look at it this way: If the euro falls and/or Portugal reverts to the escudo (or the Real?!) then my capital is down but I will enjoy really cheap holidays/living, if the Euro and the Portuguese economy do well then my investment is sound. Can't lose. Only down side is if I had to realise my capital quickly. Fingers crossed.

Big Ant

You is happily diversified against the incoming Aftershock from the QE games our politicians have been playing. Spot on ! Take optimistic perspective.

sir recorder

There are many, many countries in Europe where properties are priced, bought and sold in Euros, even though the country might have its own national currency.

Holiday property is sold to an international market. No one in their right mind is going to price it in Escudos, even if potatoes are bought and sold using that currency. Buyers want to be able easily to compare what they are buying with places in Italy, France, Spain etc..

I am not convinced about the doom and gloom. The second half of this double dip recession will be short and all the European economies will be on the way up. Memories will be short, and the recession will soon be forgotten, and house prices will rise on the optimism that soon will be apparent and generated by the general good will.

masterbaits

Ive been watchign the market since 2000

When the pound was 1-1.50e the prices were the same as they are now , the euro is being devalued through overall weakness towards that number again.While thats bad for the pocket of the worker , it keeps them in jobs through exports being better priced , and the rich banker gets richer and the taxes keep rolling in.

THe same plots and properties I looked at back in 2000 have the same prices today! While if i had bought them when you could get up to 1.60e for the quid both parties would have been very happy...but when the rate was 1-1 not so much in the favour of your pound based buyer.....yet more stock was being created hoping that the northern europeans would buy not just catering for the pound based buyer.

Even if this £1-1.50e rate comes again , especially if this was aided by eu q.e to get there , then theres only so many brits to take advantage of the MASSES of unsold and unlisted property on the algarve....or indeed spain and tbh euro to euro whilst favoured by the banks whom own the stock doesnt help foriegn currency reserves for import and export at the national level.

But there is also pitfalls for your pound buyer , ie as mentioned everywhere the REAL possibility of a rougue state declaring cheerio to the eurio.ITs already happening with the French election and both them and spain wanting more border controls reinstalled.SO its swings and roundabouts really , with the right price point comes a bigger risk for your pound based buyer.

Do you/we really think that average joe would want to take a risk on their money or even property overnight being made worth less in a reversion to escudos?

The risk is too great for anything other than a punt for the non local backed mortgage buyer , enough people are already burned by spanish corruption never mind cash flow worries , this will keep the prices well down for speculators for a few years yet.

I have no simpathies for spains economy for its treatment of british buyers , namely the land laws and corrupt developers and local councillors , things would only get worse in that they would sell you a house then declare it illegal happens more , buyer loses money , developer and bank does not , and do the same thing again.

This all has a knock on on the market for the seller in combination with a saturated market - leading to southward prices of apartments.Although the non condo villa with its rarity is in the lesser numbers , ie non saturated market ,thus will keep its price vs the apartment , it still has the problems for selling that I mentioned specifically liquidity , devaluation and perception of doom.While this will drive values down , it wont do so as much as apartments which will only look attractive to the UK buyer , but only when both the price has bottomed , halved , and say an echange rate of over 1 pound -1.50 euros has happened or greater.

One should try and read the spanish press , the property market is on its knees , its the banks that hold the stock are TRYING to keep the balance sheets artificially high and dont want a sell off because of the dodgy accounting used for asset pricing would devalue the banks shares.

With any devaluation of the euro comes devaluation of the banks coffers , so its unwanted by them.some must fail which could send an even bigger tsunami throughout the eu . making the credit crunch in hindsight something that was a mere blip comparitively.Should such a thing happen then the pound itself would also be on the recieving end too....which works to the benefit of exporters only and again everyone else has less cash in their poclet overall.

The uk though is eating away at the pensioner , unemployed , disabled , and worker pound in the pocket to devalue away its debts combined with austerity measures that only affect the working class majority.While the rich have got richer since 06 the rest have indeed got poorer , I suspect the same can be said of europes great unwashed.The locals simply cannot afford to buy apartments , never mind villas , until the mortgages and price become 4 times multiples of combined household wages , and as we already know the wages in portugal are quite poor and the mortgages are by the same banks that are not selling off stock to increase liqiudity.

Put it this way , the uk banks that folded during the credit crunch have made the uk govt money when the assets were sold off.THe british ones that took the biggest hit , RBS through buying AMRO (eu bank) has already made HMG money through the Asset protection Scheme and are sitting on large amount of shares (think of these as national reserves).The Eu individual countries need to do the same but thier hands are tied , unable to inact state specific local QE or the need to take on the banks and nationalise them to sell off the assest at firesale prices is hindering stability , liquidity etc.

IF we voters are in debt that cannot be repaid we have to pawn the family jewels or indeed sell off the house , banks though do not and simply get cheap loans from the central banks to stay afloat , and/or bailed out by the taxpayers.Instead they selfishly choose not to sell off assets ie the stock of property they have on their loan books at any price they can get to get liquidity back at a percentage.The banks cannot do a IVA and have their debts wiped unlike us , and countries dont like to nationalise banks to repay both their countries and banks debts.

While the eu told the uk that IT had to sell off govt backed banks the sneaky buggers were using this to get high street banks on the cheap for their own banks like santander , the vultures circled.When they were doing this they too were bailing out and even holding stock of banks in govt hands , or indeed some industry like vw and french car makers.All that backdoor and backhanded stuff is coming home to roost.THis is the price they have to pay for telling the UK what to do while not practicing what they preached , but again we will suffer more as the euro worth decreases the uk edge does also.

Is there light at the end of the tunnel , no , not for a generation.Some of us are old enough to remember the imf bailing out the uk , then austerity and the mass unemployment of the 70s and 80s and a recession or three in between and another austerity.

The eu has had a taste of the sweet wine for a generation now its time for the next to pay its fathers drinking debts before they too can have a quaff.Its not going to be pretty , Imagine the miners strikes , poll tax riots but in the meantime pleases remember thats british civility compared to what the souther europeans will do.You will see the return to the dark ages of 3g households before then.As the wealth has shifted eastward and they are removed from 3g the western world has returned to it.

THe eu electorate is like its uk cousin easilly used by the rich and powerfull.THe media works the politicians words , blaming the workshy , the disabled , the pensioner and the immigrant for their countries dire straits while the rich stay rich. But theres still enough out there that had heard that from the wealthy and powermad the first time around early last century.This is something that sticks in the mind of the european and something that the creation of the EU was deemed to prevent from appearing again , I hope it is indeed funny this time though when history repeats itself....but it rarely ever is funny.

anna58

A good analysis for 1st. May!!!

sir recorder

I was in Greece last year, in the Peloponnese. We looked at anumber of appartment properties in the Porto Heli. This is a largely undeveloped area, with buildings built on scrub land. Virtually no towns, no facilities, roads extremely poor

Yet despite this whole lack of general infrastructure, the Greeks wanted 600,000 euros for about 150 Sq Metres of development. I don't think they will get it.

But comparing what was on offer, the quality of new built accommodation in Portugal seemed far superior, and for less money.

I think the main problem is Portugal is not selling itself as a place to retire to.

Does the Portuguese Government have a proper ministry ensuring that proper plans are in place to ensure that retirees from other parts of the EU can set up home here efficiently, quickly and at minimal cost?

Very big minuses to moving to Portugal, are the very heavy costs of running a car: high motorway tolls, high petrol costs etc., possibly high taxes if you make yourself a permanent resident.

Further, Portugal's local authorities are dependent on the huge sums of money paid by holiday home owners, payments for many services which they don't actually use. If there were foreigners in PT paying for all this then the locals would have to pay for all these out of a very minimum general income, or do without.

Portugal is in competition with all the other countries of the mediterranean for this.

Greece is poorly managed in this respect demanding that foreign householders deposit a huge minimum sum of money each year in a Greek bank which must be spent in Greece; at least that is what I have been told.

MrBife

I am struggling to reconcile almost everything you state in your last post about Portugal and doubting that any of it is based on fact or experience.

Portugal is not selling itself as a place to retire to as it doesn't need/want to do that, nor could it afford to do that since retired folks make little contribution to the state and often require a lot of services and support.

It costs less to run a car in Portugal than in the UK (cheaper road tax, cheaper fuel, cheaper servicing) if you want to drive up and down the motorway then you pay for that but if you don't then you pay nothing - quite fair really.

Holiday home owners don't pay more for services than anyone else. Portugal's local authorities are not dependent on income from holiday home owners - that forms a tiny proportion of their budget.

Portugal doesn't compete for property buyers, you would give politicians too much credit with that statement. Buyers, holiday home owners visitors and residents have to take it as they find it and work with the system - a system that is impartial irrespective of provenance.

Portugal suffers most of all from badly informed people talking the place down rather than talking it up as they should. It's a great place to live !

masterbaits

Sir recorder the difference with greece is that they couldnat balance the books , and rather cooked them , even back before the euro their answer economically to a slow down in tourism was to put the prices of everything up....which drove tourists to cheaper places.

The greek way of life was unsustainable , as was the way europe was funding them , your train driver was making more than the mps in the uk , and of course like portugal had 14 months wages a year.

thinking that a minority of pensioners coiuld retire anywhere and be a solution is no solution , the numbers dont add up.

It could be argued that britian did it right on home and holiday home ownership , keeping stock limited keeps the prices high , while in the uk it hurts the first time buyer as double digit price increases kick in due to the economics of supply and demand...something that isnt happening in the holiday resorts of the eu.SImply put theres oversupply and no demand combined with deliberately holding back property in the banks books speculatively while the banks eat from your pocket fed by their politician monkeys.

In any oter industry a company would have to sell off assets and be liquidated to pay off its debts ,which is what happnes to a developer but not it seems to a bank.Its a finger in the dyke holding back the deluge hoping that things will change , and as i posted change can only happen with devaluation of both property and of course the euro itself.However the rich , banks , politiciains , dont want this , but the buyers and businesses not based on property that export whom drive the economy do.

The idea of a fiscal union works , however only if you have a complete automation of legislative law.The eu has too many governments , and too many voters , diversified industries and regional variations in property want vs need to work at present.It needs a hard cold approach that the voter does not like , even more so as they see those taking their wages from them to make them rich.Its these kind of seeds that spawned the far right in Germany long ago and created politicians that take from those it uses as blamehounds for their woes....

Just as we see in the uk now as the tories and ukip pull the wool over the eyes of the electorate blaming everything other than the real villians.INCLUDING.

immigration , always the easy target , but the truth is immigrants wrok hard and breed more future taxpayers , fill the jobs that no one can/will do or in the case of doctors that can be filled.

Pensioners , they take from pensioners as the pension fund managers get richer.

unemployed , take from the uneployed when they have no jobs from them , move the unemployed in geographical cleansing to gentrify London east
end.

Disabled , take benefits from the disabled in weighted atos tests making the owners of atos richer.

Education , increase the student fees to remove the under classes from the kind of education that makes their own children 2nd rate in job applications.

Savers , take from the saver aiding the banks and forcing those that saved to pay for the credit of others and govts.

Qe devaluing the pound for the worker meaning less worth in the pound but making exporters richer.Most of these companies will no doubt be using every law in the books to avoid paying tax like vodaphone or offshore banking havens , which the Cameron family likes so much.

THe future is not bright for the uk or PIIGS , only Germany and marginally France is ahead of the financial game and theres not suffcient numbers looking for 1-3 bed apartments -even if they could get mortgages while the interest rate is low they arent for the most part mass buyers of property outside their countries.The WEalth funds of arab states , china , and russia are only interested in metropolitan property , so this too rules them out.

Even if the euro is devalued it wont benefit those that are in it so the only option is devaluation of property prices for them , which just wont happen unless govts make banks offload assets to take a short term hit for national long term gain.If they dont do it soon you will see the socialist and far right taking more and more power in the eu until they take them by nationaisation , which will hurt the euro FAR more than forcing the banks to capitalise at asset losses.

The other option for portugal that I see is |HIGH taxation on empty property/land , making it uneconomically viable for banks to sit on property for long periods , or indeed for individuals and ultimately taking back land with no discernable owner for govt sale.You algarvean resident cannot afford these properties without having 3g (3 generation houses) , and even then cannot afford to pay over 250k for 3 beds unless upper middle class and both working.Like spain they have a huge oversupply and no demand which should in capitalist dogma have drove prices down , but the supply is being held back speculatively while the banks are fed from our pockets.

Banks dont operate like other financial entities , the dont operate long term as we or financiaers do , their long terms are REALLY long term , longer than you or I will be about and even our children and their children.The play finances over multple generations as long terms , we though play the game over 4 score and more.

IF you beleive in conspiracy theories then there is families that control , or indeed more correctly own or act in the banks best interests like super masons - Presidents and Prime ministers.UNSuprisingly these people end up bailing them out , or only some of them out from our pockets , but there was one exception to the rule Gordon Brown.Brown went against the grain and bailed out RBS for the taxpayers benefit rather then using the taxpayers pocket in the ways mentioned already , like QE and robbing the poors pockets , we know how the media is ruled by the rich got their way there from the sheep electorate.He knew how they work , and financially is one of the poorest Pm's the Uk will ever have , his wealth cannot be tracked back generations or is kept away from the taxman like those currently in power and their cabinet of millionaires getting richer while preaching austerity.

Funny how its all quiet on the bank bashing front in the media since the Tories took power in the uk , or is it?

newintavira

Not sure I agree with this...