Property - Asking Prices

[cereza]

The market for villas is stagnant so what is the point in dropping the asking price ? - buyers do not exist at the moment and even if they did they would be looking for discounts of 50% even if the asking prices were lower!!!

shanagarry what was the "most unusual" thing that you did to sell your property before ??

[EMM]

Cereza is right, We do some work with an agent back here in the UK. The enquiry level has never been lower and enquirers expectations are often unrealistic.
UK buyers will not return in numbers until UK property prices increase and equity returns.
Until then the market will have to rely mainly on cash buyers.

Anyone who thinks that things are bad in Portugal should look not just at Spain but also Florida, Cyprus, Bulgaria in fact almost anywhere where featured on the " place in the sun " type TV programmes.

I think Shanagarry said that he did a form of part exchange with his builder.
We know of at least one other developer who is doing this.

[shanagarry]

There is an article in today's Mail on Sunday addressing the property issue - not just Portugal. In fact it didn't paint that bleak a picture compared to Spain and Ireland. Nevertheless, it did suggest that the situation is not going to improve in the foreseeable future.

shanagarry what was the "most unusual" thing that you did to sell your property before

What I did is only of use if you are not selling up and moving out. We wanted to refurbish our property ahead of moving here - but were 'messed' about by an architectural firm - so decided to abandon that option. We had seen a property we liked but after many attempts over two years to get the agent to put proposals to the developer - I was continually thwarted by his reluctance to put my part-exchange proposal forward. I eventually discovered that he could not understand the concept. I resorted to a direct approach and after 13 months of legal 'shenanigans' we got the deal that suited us.

What we got was something that is now common-place in the UK. Several years previously I had bought a property in the UK using the same process but I had not counted on the lack of ambition by the two sets of lawyers here in Portugal when both the developer and myself sat in front of them to explain it - their initial confusion and lack of understanding was staggering. The 'Not Invented Here' syndrome was very evident during the process - but was eventually embraced.

This is a condensed version of a lengthy and frustrating process - but perseverance won in the end and both parties got what they wanted.

For this to work you need to find an entrepreneurial property developer with aged stock and an open mind - research and patience are the other essential components. I am happy to discuss this offline as it was, for our lawyers here in Portugal a ground-breaking transaction - but fortune favours the brave

[cereza]

Thanks for that shanagarry - all understood and from my own experiences I can quite appreciate the dificulties of explaining a new procedure !!!
Did you ever explore the auction route?

Yes The MOS article was interesting although it was strange that they gave the example of a villa in the north of Portugal. I do believe that the situation in Portugal is no where near as bad as Spain. I always thought that the glut was just along the Spanish Costas but when I drove down to the Algarve this year I was astounded at the number of unfinished large estates in every Spanish town and city - the building program must have been huge and totally OTT !

[shanagarry]

Cereza

Our previous property was in an offshore company and having had 3 sales fall through early on, I wasn't prepared to be inconvenienced a fourth time. It was for that reason that we decided to refurbish - but that brought its own 'hassle' - which was not the doing of the Camara!

You asked about auctioning? A friend did that 5 years ago (before the bubble burst) and did get a good price but the aggravation that followed was a nightmare. The winner started to find fault with the property (unjustifiably) and tried to renegotiate the price - resulting in the process taking a further 8 months to complete. With mine offshore - I could see all of that rearing its head and dragging the process out. In the end I/we got the deal and the property we wanted - but that too needed patience and discipline. I could write a book on my Algarvean Property Buying Experiences (all 5 of them) - but don't want to distress myself.

The piece in the MoS referring to the north of Portugal was written by the woman who was the editor of the failed Portugal magazine and I sensed in her writing a 'tad' of resentment towards The Algarve. I suppose if you have extolled the virtues of a place for so long, especially in writing and it doesn't work out - through no fault of your own - you might feel let down.

[cereza]

Thanks shanagarry- nice to have a civilised conversation on this forum for once

[shanagarry]

nice to have a civilised conversation

Couldn't agree more. As one of the antagonists in some of the past unpleasant exchanges - I have resolved to no longer partake in any such exchanges

[shanagarry]

In this morning's paper there is a report stating that Rightmove calculates that only 600,000 homes will be sold in the UK in 2011 - from the 1.7M it used to be in the 'good times'. They further suggest that sellers will have to drop their prices by a realistic 5% if they want to attract a buyer. Try getting somebody in negative equity to swallow that!

Given that the UK is The Algarve's best supplier of property buyers - when will the Algarvean (British/German/Dutch etc) seller realise that the funds her/his prospective buyer was hoping to use to buy their property in the sun has now been reduced to a pittance and that they should reduce their asking prices to match the available budgets?

It's all very well pitching a price at an unrealistic level knowing that you will 'happily' reduce it when somebody puts an offer forward - but given the source of buyers and their predicament in their domestic markets - you might just put them off altogether when they do the quick sum and conclude that 'it's beyond them' and abandon the idea.

The article I am referring to also claimed that it is taking an average of 100 days to sell a UK property - in my case here in Portugal it was at least 1,295 days - I know a few people who covet that number

[EMM]

There are some real contradictions in the housing market that can only lead to further and significant volatilty in years to come.

There is no doubt that housing sales are significantly down but demand for homes is still on the increase. Here in the Bristol area the forcast is that there will be a shortage of new homes running into thousands of properties.

What will happen as soon as affordabilty ( mortgage funds ) return we will see yet another housing bilp with significant price rises.

Transferring this to the secondhome market where also new builds are also declining in number you could expect to see a similar return in demand and higher prices.

The question none of us know the answer to is will this be in 3 years, 5, or 10.

We all know that the housing cycle can rebound dramtically , if I did have a property to sell and did not need to sell then why not wait for a better price.

[laserblazer]

Is the reason for new housing in the UK atl east partly due to failed relationships? Perhaps couples won't be able to affford to split up, so we won't need the extra housing.

[widge]

Cereza is right, We do some work with an agent back here in the UK. The enquiry level has never been lower and enquirers expectations are often unrealistic.
UK buyers will not return in numbers until UK property prices increase and equity returns.
Until then the market will have to rely mainly on cash buyers.

Anyone who thinks that things are bad in Portugal should look not just at Spain but also Florida, Cyprus, Bulgaria in fact almost anywhere where featured on the " place in the sun " type TV programmes.

I think Shanagarry said that he did a form of part exchange with his builder.
We know of at least one other developer who is doing this.

It's an economic conundrum.

House prices in the UK are already too high for first time buyers and even though interest rates are at an all time low, mortgages are hard to get without a significant deposit & a blemish free credit record.

The € is overvalued relative to the $ & the £ making european property unaffordable for the Brits.

The economic outlook is uncertain and despite savings rates being at an all time low savers are unwilling to take unnecessary risks with their capital - like buying holiday homes abroad.

So I agree with you we are likely to experience stagnant or falling property values everywhere until the future looks brighter.

[EMM]

UK house prices are not TOO high as such, its the lack of finance and the high deposit levels that are freezing out the first time buyer.

As an example lets go back 3 years and take a typical first time buyer property £150,000.

A couple with a combined income of £40,000 joint salary could get easily get a 90% + mortgage needing only £10-£15,000 deposit.

Now with a max multiplyer of 3 x salary combined with a 30- 40% min deposit the £150,000 house would need to be at least 30% lower for the same couple to afford it.

Such a dramatic fall in house prices would undermine the UK economy and if we thought we had problems now they would be nothing compared to the financial chaos caused by putting hundreds of thousands more into negative equity.

That is why I remain optimistic in so fare as it is possible to be so that we will soon start to see an easing of finance through 2011/12 and a gradual return of the housing market.

[sunman]

house price inflation was fuelled by wreckless banks lending far too much money to wreckless borrowers, a vast proportion of whom couldn't afford the repayments.
an example; my daughter took me to see a flat she was trying to buy; I asked her how she could afford the repayments when her income was only £19,000; she said that the mortgage broker was putting £30,000 down as the income figure and that he could get her a 100% mortgage. The flaw was that the rate was very low for 2 years and then rose. I got involved and asked the broker who would be making the repayments when they went up? needless to say in this case nothing was done.

These incremental mortgages were a time bomb & the mortgage brokers were acting on behalf of the Norther Rock type lenders who just wanted market share regardless of who they lent money to.

That block of wreckless credit, some good some bad is gone & in all likelihood will never return so house prices have to reflect that loss of liquidity.

Back in the day, my girlfriend and I stayed in all week, treating ourselves to a chinese takeaway and a bottle of Blue Nun whilst watching The Professionals or Tales of The Unexpected on a Sunday night in order to save for our first property deposit, a discipline that a lot of people would benefit from learning; a credit card based lifestyle is unhealthy to say the least.

[widge]

house price inflation was fuelled by wreckless banks lending far too much money to wreckless borrowers, a vast proportion of whom couldn't afford the repayments.
an example; my daughter took me to see a flat she was trying to buy; I asked her how she could afford the repayments when her income was only £19,000; she said that the mortgage broker was putting £30,000 down as the income figure and that he could get her a 100% mortgage. The flaw was that the rate was very low for 2 years and then rose. I got involved and asked the broker who would be making the repayments when they went up? needless to say in this case nothing was done.

These incremental mortgages were a time bomb & the mortgage brokers were acting on behalf of the Norther Rock type lenders who just wanted market share regardless of who they lent money to.

That block of wreckless credit, some good some bad is gone & in all likelihood will never return so house prices have to reflect that loss of liquidity.

Back in the day, my girlfriend and I stayed in all week, treating ourselves to a chinese takeaway and a bottle of Blue Nun whilst watching The Professionals or Tales of The Unexpected on a Sunday night in order to save for our first property deposit, a discipline that a lot of people would benefit from learning; a credit card based lifestyle is unhealthy to say the least.

Spot on sunman, sums up the situation very well.

[shanagarry]

I remain optimistic in so fare as it is possible to be so that we will soon start to see an easing of finance through 2011/12 and a gradual return of the housing market

I so hope you are proved right but am sceptical in the short-term (2 years)