Whats Happening With Portugals Real Estate Market?
News Posted On: 07 February 2013
Portugal’s Institute of Tourism is all set to launch a new programme that is effectively anticipated to increase resort property sales in the country. Real estate activity in Portugal has been significantly low compared to the period about seven years ago when the market was at its peak. Citizens of Non-EU countries are targeted as the Iberian nation hopes to gather funds and get itself out of the economic mess. According to reports in Controlinveste, a Portuguese real estate newspaper, the southern region of Portugal is home to several resort properties. Algarve and Madeira, in particular, have some truly beautiful properties that are now available for considerably discounted prices.
Foreign Investment May Save the Day
The southern part of the European continent reports around 100,000 real estate deals on an annual basis, and Portugal is responsible for only four per cent of these sales. Controlinveste cites the country’s Economics Minister Alvaro Santos Pereira stressing on the fact that sale of properties to overseas investors is of utmost importance if Portugal is to restore effective functioning of its economy. He said that the domestic market is all but inactive, and that the nation had to turn its attention to foreigners in efforts to save its crumbling economy.
21 Per Cent Decline in Bank Foreclosures
Foreclosures in Portugal were down by 21 per cent to 5,500 in 2012, in comparison to the previous year. The property company association of Portugal said that the number of real estate assets that were acquired by the banks fell drastically last year, and that the trend may continue in 2013. Luis Lima, the president of the association said that there was an increase of 74 per cent during 2012’s first quarter as compared to the same period a year ago. However, the banking industry began treating the matter in an entirely different manner after April, trying to ensure that clients have excellent conditions for a distinctive crisis.
A Change in Tactics Could Ease Tough Real Estate Conditions
According to Lima, banks in Portugal have to make a number of changes to their tactics as failure to do so may result in a further 30,000 properties accumulating on their books. He says that a change of heart is required from the government, or people will start giving away their homes in order to evade payments to banks, regardless of what value the property holds. He added that renegotiation was a new option for homeowners. Unlike earlier times when the property would be seized by the State in case a homeowner failed to pay up, people can now renegotiate with banks, hold on to their priced assets and still be able to manage payments.
Out of the 5,500 homes that were foreclosed last year, 70 per cent belonged to builders and developers. Construction activity has been significantly reduced as developers have no guarantee that their buildings or residences will be purchased. Establishment of new properties leaves them with the risk of being seized by banks if developers don’t find buyers.
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Written by Les Calvert
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