Owning a home in Portugal is back in fashion in 2014, according to the latest RICS/Ci Portuguese Housing Market Survey (PHMS), which showed a significant pick up new buyer enquiries during January.
This increased activity in Portugal’s housing market has pushed the sales expectations for the coming three months to its highest level since the PHMS survey was launched in 2010.
The national confidence index – is a composite of the sales and price expectations series – increased to +16 from the previous figure of +6. This, again, is the best reading since the survey’s inception and marks the third successive month in which a positive value has been posted.
The pick-up in buyer interest and confidence has, however, yet to feed through into prices of property in Portugal. Indeed, prices are still falling (albeit at a moderating pace) and are expected to continue to do so in the near future. In the lettings sector, tenant demand rose marginally whilst landlord instructions fell for the fourth straight month. Rents continue to decline, with little respite expected in the short term. Furthermore, future lettings activity is only anticipated to rise modestly.
On a regional level, new buyer enquires increased substantially across all areas covered by PHMS. Likewise, sales are expected to grow materially throughout each region and this growth is expected to be sustained.
RICS Senior Economist, Josh Miller said: “The January results show buyer interest returning to the market while sales are expected to pick up in the months ahead. For the moment however, there is little sign of this filtering through into prices. The recent GDP figures also portray an upbeat message although the recovery still has a way to go until it is firmly entrenched.”
The £/€ exchange rate hasn’t so favourable to UK buyers in Portugal for over a year now, thanks to the interbank rate hitting £1/€1.22 on February 14th, the second time it has broken the €1.22 barrier in three weeks.
The last time £1 was worth €1.22 since the end of January 2014 was the second week of January 2013, after which it plummeted to lows of €1.14 in March and again in July, before gradually rising throughout the second half of 2013.
Sterling’s performance since the start of this year has been encouraging for UK buyers, with the rate spending the majority of the time above £1/€1.20. The bullish UK economy is expected to help Sterling maintain this level, with some analysts saying it will strengthen further.
Not only does property in Portugal get cheaper to British people as Sterling gains value against the euro, but it also brings down the cost of euro mortgage payments and running costs that come with a Portuguese home.
As an example, the Sterling price of a typical €400,000 townhouse in Vale do Lobo is currently £23,000 cheaper to a UK buyer than it was at the end of July last year, when the rate was £1/€1.14. Meanwhile, a typical monthly mortgage payment of €1,500 has come down to £1,230 from £1,316 for the same reason.
British people who need to send money to Portugal to purchase a property in the Algarve, or make regular payments between a UK Sterling bank account and euro account in Portugal are advised to use a FCA-authorised currency exchange specialist rather than asking their bank direct to make the transfers, as they receive a better exchange rate and more personal service.
Getting to a home in Portugal is set to get easier for Britons and other Europeans, after low-cost carrier Ryanair announced at the end of January it will open its third Portuguese base at Lisbon in April this year.
Ryanair confirmed it will invest more than $90million at Lisbon’s Portela Airport, where it will have one based aircraft and offer four new routes, bringing its total out of the Portuguese capital to nine destinations.
This development means that from April 2014 Ryanair will also offer flights to Dole (France), Marseille, Manchester and Pisa, in addition to its existing services to Stansted, Paris, Brussels, Frankfurt and Dublin. This will bring the airline’s total number of weekly flights out of Lisbon to 124, carrying up to 900,000 passengers. The new base will also create 900 onsite jobs, according to a Ryanair statement.
Ryanair’s Chief Commercial Officer, David O’Brien said: “Ryanair is delighted to announce Lisbon as our 65th base – and our third in Portugal – and to unveil four new routes to Dole, Manchester, Marseille and Pisa beginning in April, as part of our summer 2014 schedule. Our four new Lisbon routes will allow Portuguese consumers and visitors to escape TAP’s high fares and instead enjoy Ryanair’s lowest fares and industry leading customer service and punctuality. Only Ryanair, with its 175 new aircraft order, can deliver the capacity, new markets and low costs demanded by Portuguese consumers and visitors, and looks forward to working with Lisbon Airport to unlock the vast potential currently suppressed by high access air costs.”