The economy in any country is linked largely to its property market. Anyone watching Portugal at the moment, wondering if the country will stablise or ask for a hand-out, will be wondering whether the property market is on the way up or down. This is hard to gauge for sure because there are some who say the property market is stable, others who say it is picking up and others who say there is another property crash on the way.
Looking specifically at Porto, there is one evident fact – there’s far too much property on the market for the number of people willing and able to buy it. Why this is, I don’t know, and you don’t have to be an economist to know that if there is a glut of available property, one of two things will happen – prices will either fall, or property will go largely unsold.
Drive around the Matosinhos beach area, for example, and you will pass at least three major apartment complexes in the process of being completed, while land is being cleared for more. Many of the apartments in these buildings will remain empty and unsold for years. Some modern blocks built a decade ago still have unsold space.
On the face of it this seems like a bad thing – after all, you would expect this to lead to developers going out of business, people struggling to sell older first homes to move into newer, more expensive ones, and interest rates to be affected as a result. What if, though, all this property development in Porto is a sign of investment for the future? What if it’s for a growth of people coming to the area? Statistically, this looks like bad timing too because more people are applying to leave Portugal to go back home than in previous years, and the number of immigrants coming to the Porto area has been falling recently.
That will change though. Porto has many advantages over the Algarve and Lisbon. Its weather is more akin to northern Europe, but still warm through the summer, it boasts several modern shopping complexes, a good transport network and it is possible to get across town in a few minutes (something that’s impossible in Lisbon). The airport, too, is built for growth, with Ryanair using it as a hub and the airport itself having been voted the tenth best airport in the world recently.
The Porto region is ready for the population expansion it deserves, but if you compare the property market with the current state of Portugal’s economy, you may just have cause to wonder whether the investment will be too much too soon. Time will tell. One thing’s for sure, if you are looking to buy property overseas, Porto is a buyer’s market.
Some useful reading:
- Portugal property values down 3.2% in 2010 (A Place In The Sun)
- Enquiries about property in Algarve are increasing (Daily Mail)
- Portugal property prices likely to fall in 2011 (Property Wire)
- Local agents feel gloomy about Portugal in 2011 (Overseas Property Professional)