Lockdown and the shift to remote working has fired up British demand for European holiday homes. But buyers have been stuck by travel restrictions – until now.
Inquiries from holiday home buyers to view properties in Portugal have soared since the country was added to the UK green list at the weekend.
Kerstin Buechner, of QP Savills estate agents, said inquiries from British buyers this year were up 70pc compared to the same period in 2020. “It is unreal.”
Viewings of properties in Portugal via Knight Frank’s website rose 18pc in April compared to March, as it became increasingly likely that travel would soon be allowed. Alex Koch de Gooreynd, of Knight Frank, said: “There is a huge amount of pent-up demand.”
So what do you need to know if you want to buy a holiday home in Portugal?
What is happening to property prices?
The pandemic has slowed price growth in the Algarve. In March, the annual growth rate was 2.9pc – a drop of 5.1 percentage points from the level recorded in March 2020. National house price growth also slowed from 10.3pc to 6.8pc.
Recent travel restrictions have naturally stalled sales of holiday homes. In the last three months of 2020, there were 3,697 sales in the Algarve – a drop of 12pc compared to the same period in 2019, according to Knight Frank. Across Portugal as a whole over the same period, by contrast, sales recorded a slight uptick.
But now an imbalance of supply and demand could push up values. Many would-be sellers have also been able to fly out to their properties for valuations.
“A year ago, in the western Algarve, in the €1-2m price bracket, I had 12 properties for sale. We now have three,” said Mr Koch de Gooreynd. “I have 20 people waiting for anything to come on the market. I think prices will get squeezed up.”
Where should you buy?
British interest in Portugal’s holiday home market is concentrated heavily in the Algarve, where Britons account for half of buyers, said Mr Koch de Gooreynd.
Holiday home owners in the Algarve fly into Faro airport. To the east, towards the Spanish border, the market is primarily local. “It’s not high up on the international travel shopping list, it’s where you go for quiet escapism,” said Mr Koch de Gooreynd.
On the other side of Faro is the “golden triangle” of high-end resorts. Quinta do Lago is the priciest, with villas often selling for more than €10m. Properties in neighbouring Val de Lobo typically start from €2m.
Homes in the western Algarve, which has surfing beaches and local restaurants, are half the price. The area is popular with relocating families, said Mr Koch de Gooreynd. Central Algarve is dominated by holiday apartment blocks.
Be wary that homes often fall within touristic zones, which can have requirements that the property must be let out when the owner is not there.
What about Brexit and other logistics?
Since Brexit, British second home owners can spend up to 90 of every 180 days in Portugal. Those wishing to spend more time in Portugal can apply for residency.
The golden visa scheme grants residency (and access to the Schengen area) in exchange for an investment, typically a property purchase of €500,000.
To ease pressure on urban areas and encourage investment inland, the golden visa will no longer be available for buyers purchasing property in Lisbon and Porto after January 1 2022. Buyers should factor in an extra 8pc of the sale price to cover purchase taxes and legal fees.
Who is trying to buy a holiday home there?
“Quite often, people have decided on Portugal because they like how it has handled the last few months of the pandemic,” said Mr Koch de Gooreynd.
The green list means that Brits could have access to properties in Portugal before travel opens up for buyers from elsewhere in Europe. “Come July there is a good chance the best stuff will have gone, there is an opportunity now if you can get there,” he said.
Working from home means buyers now want larger properties where they can spend a larger proportion of the year, said Ms Buechner.
A quarter of inquiries are from families looking to relocate, she added. Good international schools include the Nobel International School Algarve and the Vilamoura International School.