Is the Algarve property market changing direction? Zoie Hawker, Managing Partner at Fine & Country Algarve reveals the ups and downs of the market and her predictions for the future:
2018 was a record year for real estate in Portugal, and a record year for us at Fine & Country Algarve. But now, as we approach the end of the first half of this year, there is a definite feeling that the market is changing.
Last year, property investment in Portugal reached 30 billion euros, that’s a staggering 15% of GDP. The market has grown (in terms of total investment) by an average of 20% per year since Portugal started to emerge from the financial crises in 2014, but there are now signs that it is starting to consolidate. Prices are continuing to rise, but most experts agree that price increases this year will be less than over the last few years.
Based on our recent data, we have seen a small drop in the number of enquiries from potential buyers compared to 2018, with a significant drop in interest from the UK, compensated for in part by growth in other markets and positive response from new Portuguese language marketing we have initiated over recent months, targeting the domestic market and Brazil.
From January to May we received 750 sales enquiries. This is down by 15% overall compared to last year and down by 30% from the UK. This does not include new customers from events we have participated in, such as the Moving to Portugal shows in London and Dublin last month, both with very positive results.
The drop in enquiries from the UK is no doubt due to the latest wave of Brexit related uncertainty as what will happen to the UK is anyone’s guess at the moment.
But here at Fine & Country Algarve we have a very diversified client base, having sold properties here in the Algarve over the last 12 months to buyers from 21 different countries, ranging from key markets such as the UK, France, Germany and the Benelux region to the USA, Dubai and South Africa.
Our colleagues at other leading Algarve estate agencies agree with us that the general slowdown in demand from British buyers could well have an effect on the market here in the Algarve. For the many estate agents and property developers who rely primarily on the UK market, sales will be sluggish and hence, we do not see that prices will be driven up at the same levels as in recent years.
Overall however, the market is still strong and even though enquiries are slowing down, we have seen a strong increase in the number of sales completions and overall sales volume from January to May, compared to the same period last year.
So, is the market changing direction? We would say no, what we expect to see this is less growth, or rather consolidation, which after the heady growth of the last few years can only be a good thing.
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