As the global financial crisis and its love-child the EU debt crisis continue to claim scalps, one of its first scalps, Portugal, continues to languish in economic darkness despite its hefty EU/IMF bailout to bandage up its scalp.
You look at Cyprus and Portugal and they are both heading down the same dark road of misery, but with one difference that matters to you property blog readers… foreign property sales. Yes, foreigners are still buying property in Portugal.
While foreign sales of Cyprus property came to a near complete standstill very early in the crisis, foreigners have never really stopped buying property in Portugal. This is because of a number of factors:
- Portuguese property prices never boomed and so still presented and presents good value for money
- The Portuguese banks never loaned irresponsibly and so weren’t left in a coma by the crash. The remaining liquidity meant and means foreigners can still get mortgages on Portuguese property.
- Portuguese property has held its value much better than most markets, and this made and makes it still a safe asset to put money in, especially compared to bank savings, which are continuously making negative returns due to low interest rates, high inflation and volatile forex conditions.
- Portugal’s status as an affordable alternative to Spain, with all the above, and the consistent love affair with the Algarve. This is especially important because of the target market, golfers and wealthy lifestyle buyers have been much more active in foreign property markets than the speculative investors that drove the boom in Spain.
You can probably fill in a couple more if you are a Portuguese property buyer. Whatever the reason, Portugal property was one of the first property markets in world to bring positive reports in the national and industry press, when Knight Frank reported a surge in demand from foreign (mostly Irish) buyers, and their report was confirmed by other prominent sources.
While foreign demand has continued for Portugal property, it has dipped considerably and this pressure has led to price cuts and some great deals being offered for discerning buyers, including finance of up to 80% LTV.