77
77

Resort Sales Take a Hit from Brexit

22 March 2019 – Richard D. K. Turner

Brexit, the long and painful process whereby the United Kingdom is attempting to divorce itself from the European Union, is inevitably affecting the real estate market in the Algarve, particularly in resorts.  The British have long been the principal buyers in the region, and the uncertainty surrounding the process has led to buyers from the region taking longer before finalising any purchases.  The news stems from an article in the Diário Imobiliário, which examined the latest Resorts Market Report, conducted by Confidencial Imobiliário in conjunction with APR – the Portuguese Resorts Association and Turismo de Portugal, a government agency.

Prices in the region fluctuating

According to the report, residential real estate prices at resorts in Portugal increased by 18% in the second half of 2018, while the number of homes in the pipeline grew by 38%. However, despite the growth over those six months, prices have fluctuated, unlike the steady rises seen in major Portuguese cities like Lisbon and Porto.  For example, the market for homes in resorts fell by 10% in the second half of 2017.

The continuing problems with Brexit, however, have led market watchers to lower their forecasts for price growth in the short to medium-term. The survey forecast a 5.5% increase in 2019, as British buyers have become more wary of big-ticket acquisitions in such uncertain circumstances.

Albufeira-Loulé, the centre of attention

The region of Albufeira-Loulé, according to the report, was responsible for 46% of the units sold in the Algarve in 2018.  The average asking price in 2018 stood at 4,493 euros/m², with prices in some areas and resorts reaching 8,848 euros/m2.

The SIR-Resorts study also noted that “housing sales prices in the Algarve increased by 13% in the third quarter of 2018 over the previous year, according to Confidencial Imobiliário’s Housing Price Index (IPR).” Albufeira, Loulé and Tavira saw the most significant increases in the region (17%, 16.1% and 15.1% y-o-y, respectively). Portimão, the region’s most dynamic sales market (17% of the total for the quarter), saw an annual increase of 11.6%, after a 2.5 point drop. Faro (11.8%), Silves (7%) and Lagos (5.3%) also saw above average prices.

Work began on 3,441 new units in 2018

The pipeline of new housing in the Algarve registered strong growth in 2018, responding to the supply constraints seen throughout Portugal. The increase of 38% (y-o-y), from 2,491 last year, was the second highest in the country, losing out to Lisbon, where the number of new units under construction rose by 43%.

The 3,441 new units comprise more than 415,000 m2 of new construction in 1,208 housing projects (79% new builds vs 21% rehabilitation), of which 88% are single-family houses. The rest are apartments.

Original Story: Diário Imobiliário