Data released by the European Central Bank show that real M1 deposits in Portugal have fallen at an annualised rate of 21pc over the past six months, buckling violently in September.
I realise that monetarism is rather out of style these days but even without being all Friedmanite about it, that\’s just not a good sign.
The housing market here is pretty much dead: we\’ve had our two houses on the market for a year now, reasonably priced, and we\’ve had two viewings. Much the same is true of others we know. Four local estate agents (two of them ReMax franchises) have gone bust. You\’d be lucky to get a mortgage out of a local bank even with a 50% deposit.
Down here it\’s more tourist trade than anything else and much of that has buggered off to Turkey.
I\’m extremely glad that I don\’t work in the Portuguese economy. Those I know that do are hurting badly.
And a 21% fall (yes, annualised) in M1 in the last three months? It\’s not going to get any better, is it?
Update: of course, I should have thought about people pointing fingers and insisting that if the market doesn\’t clear then obviously supply is over-priced for the market to clear.
So, let me clarify. Having taken the advice of three different estate agents we priced the houses at what they thought were reasonable prices given the state of the market. Looking (yes, we do monitor this) at displayed and advertised prices for other houses we see that, at least as far as we can see with displayed prices, that we are still at reasonable prices.
Even with that we\’re not getting viewings.
This could of course mean that the entire market is wildly overpriced. Indeed, probably does, although why houses at replacement cost are overpriced is another matter. There is still net in migration to the Algarve (the flood of Portuguese abroad is largely coming from the industrial areas up north where house prices are absolutely minimal).
The why the market is overpriced seems to be the lack of available credit. Cash buyers only, or at least 50% cash necessary.
Does that clear things up?
And as to why we don\’t slash our prices in order to move the stock: we don\’t need to. At or around the current pricing we\’re indifferent as to whether we sell and move or stay put. Higher pricing we\’d love to move. Lower than current and, Meh, nice place, done up how we like it, no financial reason to move, so why bother?