Property Advice: The Credit Crunch
What Does the Credit Crunch Mean to Me?
Right now, with so much emphasis on the doom and gloom of the global financial markets what repercussions would this have on you investing in property right now?
In a lot of cases it's a positive thing, if you can see the light at the end of the tunnel, or are unfazed by the TV and media.
Firstly, if you are still in the same financial position you where 6 months ago, same savings in the bank, same job, same monthly income, then this is unlikely to change in the short term future.
It is of course true a lot of people have felt a financial crunch over the last few months, a lot of investment banks have lost funds, a lot of stocks and shares have lost their value, and if you are unfortunate to be in this position then you either look to recoup your losses, or wait and see what happens in the next 6 months and hope for a revival.
For those still interested in buying Property in Portugal what are the positives?
The exchange rate is too low to buy now
Well if you're in the UK and have Sterling, the rate right now is very low; however this is not always a bad thing. There are many UK owners looking to sell at rock bottom prices, as they can now make up the loss in capital gain in the exchange rate profit, this evens out the exchange rate issue many are afraid of. Of course if you are in the Euro already then this is an added incentive to you as the exchange rate is of no consequence.
Bank-owned Property (Priced-to-sell)
Although Portugal is a strong and sustained market, you can make some great purchases at this time, as those wishing to unload properties bought when things were buoyant look to reduce their levels of risk, and many are selling at the price they paid 2 or more years ago. Also a lot of the more rural properties, rustic hill top villas, converted farmhouses, windmills and the like, have been bought to the market at lower prices then previously seen due to a more discerning buyer taking the forefront in the market at this time.
Tourism, can I still rent?
Tourism is still very strong in the Algarve with many rental agents maintaining 12 or more week's average rental per year. With the long haul market being hit in the recent times, the short flight time and great weather of the Algarve has proven to be a popular destination. With many new attractions and a great deal of money being spent on improving the holiday appeal of the resorts along the Algarve, the rental returns have been constant and improving in many areas.
What about Financing my Property?
Mortgage rates have been reduced, and many inventive products have been introduced to help the market sustain itself. Although banks are taking a harder look at prospective borrowers, those that qualify can find themselves with a rate as low as 3% and up to 80% loan to value. With attractive offers available many cash buyers are now taking advantage and keeping the cash for the future when the exchange rate's are more favorable, or preferring to keep them in their own property at home for the next few years whilst things stabilise.
Many people have put off their plans to move abroad or to invest in property in Portugal, and if you are not sure, or have worries about it, then you should wait until you feel more comfortable. However if you are comfortable with your finances, and want to take advantage of the market whilst it is in a transitional period then let us know your requirements and we'll start working with you to find what you want.