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Algarve Property Market – 2018 Review and 2019 Trends

According to Paul Cotterell, Sales Director of Casas do Barlavento, the growth trend of real estate investment in 2017 remained in 2018. In fact, the real estate market broke records: "the volume of sales prices achieved has been smashed, with a positive response from all nations buying in the Algarve .”


Foreign Real Estate Investment


In the Algarve, Casas do Barlavento found that buyer markets are becoming more diversified, many looking for incentive programs such as Non-Habitual Resident scheme (NHR), with Swedes at 22.2% and French at 12.2%. The British market is a constant with 24.4%, even in Brexit's uncertain environment: " I’m so interested to see what 2019 is going to bring, especially with the uncertainty of Brexit and the amount of people wanting to get away from the UK," says Paul Cotterell.


Read also: New Foreign Investment Trend in National Real Estate

Housing Prices Overvaluation


According to the rating agency Moody's, Portugal is one of the countries where property prices have increased more "since mid-2013 and accelerated in 2017 to the levels which were found before 2008." The Algarve stands out as the region of the country where the price of property sales reached the highest value per square meter.

Read also: Real estate prices skyrocket in Portugal



Housing Credit more accessible


In general, most of Casas do Barlavento clients are cash buyers. However, for buyers who needed to resort to housing credit, there have been changes in this sector, now presenting historically low-interest rates and greater ease in credit approval.


Read also: Changes in Housing Mortgage Loans 



Increase in the price of real estate valuation


In keeping with the changes and facilities for the approval of housing credit, there was an increase in the price per square meter (m2) for the granting of housing credit. In general terms, bank valuations of real estate rose by around €70/m2 in one year, which encouraged real estate investment.


Read also: Bank valuations of real estate reach new highs 



New construction in Portugal


The results of Confidencial Imobiliário point out that in 8817 property licensing about 80% are for new construction. This dynamism in the construction sector tries to close the imbalance between demand and the shortage of real estate supply in Portugal.


Read also: The dynamism of the construction sector in Portugal   


New Portuguese Touristic Rental License Law and Property Tax increase

During 2018 new laws were introduced to the Alojamento Local (AL) that retract the buying of investment property to let and also there was an increase on Property Taxes .




Real Estate Trend for 2019


Increase in real estate prices


The supply-demand gap in 2018 fueled rising real estate prices, which is likely to continue in 2019. Moody's expects prices to rise by 7-8% over the next 18 months, reports Paul Cotterell: " Moody’s are giving a glowing report on Portugal for at least the next 18 months, things can only get better." Also keeping Portugal as one of the best countries to invest in luxury real estate. 


Read also: Portugal is one of the best countries to invest in Luxury Real Estate


Uncertainty mood - cautious investment


2019 will be a year of "wait and see," says the Sales Director of Casas do Barlavento: " Let us see if the Swedish interest in the Algarve maintains its popularity with no government in place but with sunshine for at least 300 days a year."


The global economy is slowing as the IMF foresees a reduction in growth for 2019 and 2020, largely due to political instability. This year will certainly be marked by a degree of uncertainty, at a national level with the legislative elections, but mainly at international level with events such as Brexit and the European elections.



Transaction growth



Casas do Barlavento predicts that the volume of transactions will decrease slightly in 2019 due to the lack of supply and increase in house prices: "the problem of lack of property to sell means that prices will go up; however I believe that we won’t have a break in demand. Unless developers slow down with the new builds and if the UK expat community don’t take advantage of the low exchange rates going back to the pound.”