Bank Property Repossession in Portugal

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In 2011, nearly 7,000  Portugal properties were handed to banks in Portugal due to the owners’ financial difficulties. This number was up by almost 18 percent over the total number of home and land parcels handed back to banks in 2010, indicating the worldwide economic crisis continues to make itself felt.

The Portuguese Association of Estate Agency Firms and Professionals indicated that, every week, an average of 19 properties per week were relinquished to banks so the owners could pay back the loans, highlighting the financial pressures that businesses and homeowners continue feeling in this extended, worldwide recession.

APEMI’s presdident, Luis Lima, in an interview with business daily Jornal de Negocios, stated that over 1,000 keys were returned to the banks in December, in a “particularly difficult second half of the year.” Backing up the belief that Portugal’s property crisis has, indeed, reached worsening levels are the property hand-backs being made by real estate developers. This development underscores the stubbornness of the effects of the recession, which has led to continued high unemployment numbers.

Banks are beginning to resort more and more to bargain-basement prices at property auctions with easy credit options, allowing them to clear their books of these vacant properties. Once purchased at auction, most of these properties are rented out.

In 2011, two specialised auction properties – Euro Estates and Luso-Roux – handled over 20 auctions, selling 650 lots at a value of over 40 million Euro.

Further underscoring the Portuguese repossession crisis, in 2011, Euro Estates conducted 11 auctions of 700 properties throughout the country. Over the weekend of May 21-22, 95 properties and 10 businesses were auctioned off. Tax authorities ordered one million bailliff actions in all of 2011, an increase of 30 percent on 2010.

The National Association of Small and Medium Enterprises has estimated that 213,000 businesses have developed financial and tax difficulties, forcing them to face about 400,000 bailiff actions. As further proof of the pressures facing property developers and construction contractors, more and more of these companies have been unable to complete projects under construction or sell the finished developments, all due to the Portuguese equivalent of Spain’s property bubble. This leads to a landscape of uncompleted “ghost towns” dotting cities and towns in Portugal.

Property sales for 2011 fell to the lowest recorded levels since 1980, posting 194,000 transactions. This is 7.2 percent lower than the sales recorded for 2010. Since 2008, this represents a drop of 20 percent. Portugal’s construction industry experienced a 9.7 percent drop compared to September 2011; this is the second-deepest drop among European Union member states, representing a contraction of 11.3 percent, compared to September 2010.

The Algarve region was hit especially hard, as this area relies on tourism-based construction for a large segment of its employment. Here at PortugalProperty.com we work with the banks on a daily basis and have a large selection of property owned by the banks at bargain prices!


For information on property for sale in Portugal and bank repossessions in Portugal contact the Portugal Property team via email at: info@portugalproperty.com or call free on: +44(0)800 0148201

Published in: Portugal Property