Searching for bargain properties in the Algarve

June 30, 2010 - PRLog -- High base costs
Unlike many parts of the world, such as Florida and many Eastern European countries, land is in short supply in the Algarve and development is tightly controlled. When you combine this with modern construction techniques and the higher costs these entail (there are no cheap timber framed houses clad in plasterboard and built in a matter of days in the Algarve), the net result is a high residual value.

Supply and Demand
One of the oldest principles in economics is the balance between supply and demand and how this affects a market.

In the sectors of the Algarve property market where demand is currently much lower than supply there are still some bargains to be snapped up. This is noticeable mainly in the primary habitation sector, and is also true for apartments and townhouses on condominiums. An example of this is a new, modern two bedroom apartment in Vilamoura, adjacent to a Five Star resort and golf course, reduced from 340.000€ to 225.000€. Link for more details: http://azul-properties.com/azul-properties/view.asp?ref=1...

As the scales of supply and demand start to balance in other parts of the market, this pressure on sale prices is reduced. There is still a constant demand for houses with a minimum of 3 bedrooms, private land and a pool, and as a result of this prices in the middle and upper sectors of the market have held fairly steady.

Once we move away from the more popular areas, and start to go inland where there is less demand, prices weaken again. We have recently listed a property which consists of a 4 bedroom house, with a separate 2 bedroom annex, swimming pool, large barn/garage and 16.000m2 of land. This property is just over 30 minutes drive to the coast, but not in a sought after area. To ensure it sells, it has been priced at a very realistic 375.000€

When we move to the opposite end of the scale, and examine properties that are extremely desirable and in short supply, there is no reduction in prices or vendors expectations. We have been instructed to sell a newly built 3 bedroom house, with a pool on the beach at Praia do Vau, literally 50m to the beach, with fabulous sea views. Properties like this only ever come to the market once in a blue moon, and the price of this beach house (€1.25m) reflects this.

“Speed” of the Algarve property market
The property market in the Algarve has always moved at a snails pace, with houses taking months (ans sometimes years) to sell. Vendors are used to waiting for properties to sell, and usually have a “plan B” to allow them to bide their time. This can range from living in a property whilst it is for sale, to renting the property whilst it is on the market.

The fact that the global markets are slower means that the Algarve market is also slower, but the difference in the Algarve is that the majority of vendors had already planned for this.

Repossession, Repossession, Repossession
It is a little known fact that the Portuguese system of repossessions does not works quickly, and is heavily biased in favour of the owner of a property. When a bank wants to repossess a property, the process takes years, not months. A bank´s first approach here is normally to negotiate a payment agreement with the owner. If this fails, lengthy legal proceedings are necessary to repossess a property.

As a direct result of this, there are very few repossessed properties on the market here, which has the double effect of reducing the pressure on owners who are struggling to pay their mortgage and also preventing properties at bargain prices coming on to the market.

And so?
If you want to find a bargain property in the Algarve, flexibility is the key. There are some bargain properties out there, but be prepared to compromise if you want a bargain.

Our advice is to do your research, make sure you define a shortlist of requirements, and then ensure you are ready to buy and negotiate on that basis.

For more information and properties for sale throughout the Algarve, please visit our website http://www.azul-properties.com

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A Real Estate agent in Loule, the centre of the Algarve, Portugal offering all types of Algarve property for sale. Properties include villas, apartments, ruins, land & investments. Advice is available on all aspects of purchasing a property in the Algarve