A survey of several Algarve real estate has revealed that most believe the market has bottomed and is now turning up.
The survey, entitled, 10-10-10 Algarve Residential Tourism Survey 2013, was published earlier this week and found consumer market confidence, offers and transactions all up on 2012 compared to 2011.
The first 10-10-10 Algarve Residential Tourism Survey on 2012 was completed in mid February 2013, researching market confidence, performance and trends in the market using a detailed research questionnaire. Data was gathered from leading real estate agents across the Algarve.
Enquiries, offers and transactions were all reported up by the majority of respondents with evidence of enquiries leading to real transactions, for example 26 percent of enquiries for villas and luxury villas converted into 27 percent of actual market transactions.
The top of the market and the ‘modest’ end of the market dominated - 27 percent of transactions were at €1 million + and there was a 17 percent increase (v 2011) in transactions in the €100,000 – €500,000 price band which took 51 percent of the market in 2012.
The middle market has traded down from a price perspective in order to take advantage of discounted product and are paying in cash – there was a 32 percent decrease in transactions in the €500,000 to €1 million (10 percent of demand) price band. A quarter of all transactions were in the €250,000 to €500,000 price bracket.
Price stabilisation is only occurring in products at the top of the market, in prime coastal locations and on recognised developments with the lowest drop in prices in 2012, of three percent recorded for luxury villas on the coast, compared to 2011.
Key purchasing motives have changed to primary residence and retirement related buying which together accounted for nearly 40 percent of transactions, with ‘for future retirement’ showing a substantial 13 percent increase on 2011.
Properties bought as a holiday home declined marginally to 27 percent of purchases.
The top five purchasing considerations were: price/value for money, lifestyle, product quality, running costs and flight duration.
Increasing market demand diversification is evident in the nationality of new buyers originating from countries less affected by the weakness in the core Euro zone countries with more than 40 percent of buyers representing more than 10 countries with 2-6% market share, i.e. Canada, South Africa, Switzerland, France, Russia & CIS, Sweden, Norway, Benelux. The UK provided 46 percent of transactions.
Market demand has been frustrated by pricing factors (40 percent), lack of finance and unreliable banks (22 percent) in addition to concerns about the Euro (16 percent).
The full survey can be seen by visiting www.ilm-group.com/10-10-10
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