Iran war puts temporary dampers on Portugal’s luxury and premium housing markets

The CEO of Portugal Sotheby’s International, Miguel Poisson has admitted that clients looking to buy premium and luxury homes are asking for “more time to think” before buying homes in Portugal.

And in an interview with the business daily he said that he was in “no doubts” that the government’s reduction of 6% on VAT would not stem the tide of rising house prices.

Poisson said that US citizens were in pole position when it came to buying luxury homes in Portugal which was shaking up the market since they were looking for larger houses and a high level of construction quality.

The luxury segment was also now providing developments linked to luxury brands with associated services.

However, he dismissed any ideas that Portugal was facing a property bubble and said that Portugal suffered from the structural problem of a lack of housing that would not be sorted out within the next three years.

On the fact that high street estate agents ERA was also part of the Sotheby’s group, that these were two different brands operating in an independent way in different markets with just some shareholders in common, whereas Sotheby’s operated in the more restricted luxury market.

Looking back, Poisson said that the subprime crisis of 2008-2012 was “terrible” with practically half of all estate agencies in Portugal closing their doors and bank mortgages and financing almost drying up at a time when around 90% of home financing had been through bank mortgages.

The market, he said, had been difficult until 2014-2015 but from then on had grown significantly.

In the beginning this growth had been because of favorable tax regimes (NHR and Golden Visa).

The Golden Visa had given the market a boost with a massive entry of Chinese buyers while the NHR had brought many retired European buyers.

What followed was an “interesting case of marketing” Portugal’s favourable characteristics (climate, standard of living, lower healthcare costs, gastronomy, history and culture) which were successfully sold overseas.

“In the luxury segment, the Americans have been our No1 nationality in recent years, with a purchasing power off the scale compared to what we were used to,” said Poisson.

At Sotheby’s the average transaction last year was €1.15 million, five-times above the national average, which stood at €240,000, and at the top of the list are the Americans”, he said.

But one of the main reasons for the influx of Americans was security. One family told him that their daughter at school had had to drill hiding under the table in the event of a terrorist attack by a gunman.

The family had told him that that had been a “wake-up call” and didn’t want to live in a country where this was the reality.

Source: Negócios; Credits: Idealista