The Two Sides of Portuguese Property
28 September 2011
Isn't this just typical of property markets and property news, just a few days after the Wall Street Journal covers the flurry of demand for property in Portugal at seriously discounted prices, the Royal Institute of Chartered Surveyors releases a report showing how confidence and prices fell in the Portuguese property market in August. According to the latter, the national activity and national confidence indices fell by eight and two points respectively to -33 and -51, while the national price balance fell from -55 to -59.
What makes it worse is that they are both right. The WSJ piece covered sales to wealthy foreign buyers, who were primarily buying prime properties at heavily discounted prices -- some having had their asking prices reduced by up to 50% in the last 2 years, and some even by up to 20% in the last few months.
Meanwhile the RICS (yes, it is the UK RICS) have surveyed real estate agents and developers in the country, and of course the agents in Portugal are primarily selling to the local residential market, which is being hit hard by the economic situation, including rising unemployment and a lack of mortgages.
This is confirmed by the RICS report itself, which clearly states that agents are experiencing much steeper price drops to developers, because developers are often more exposed to the aforementioned lifestyle buyers from abroad. While in France and Italy, such wealthy lifestyle buyers are predominantly buying traditional period homes, in Portugal new build is much more prominent.
The same can be said for most of the markets covered by the WSJ piece (Spain, Italy, and Greece, no Ireland), and indeed most established markets around the world. In the UK, wealthy buyers are buying up prime properties in Central London and prices are growing strongly, meanwhile the rest of the UK market stagnates. In France, Paris prices are rising at an incredible rate, as are prime properties in pricey areas like the Alps and the south of France, while growth in the rest of the country remains subdued.