|June 12, 2012||Tweet|
Praia Da Luz is a tony beach town on Portugal’s southern coast that’s a summer destination for British, Irish, French and Germans. A few years ago, a four-bedroom vacation house in Monte Lemos overlooking the Atlantic would have fetched more than a million euros. Today, you could pick a property like this up for almost 50% less.
Knight Frank currently has a listing for a home within walking distance of downtown and the main beach of Luz that has four en-suite bedrooms with balconies, an in-ground pool and a patio overlooking the water. Re-listed for €750,000 a few months ago, its price has already been reduced; now it could be yours for €595,000 (about $735,500).
“The economic crisis has brought prices down and created uncertainty in the markets,” says Christian de Meillac, a senior negotiator for Knight Frank who oversees the real estate firm’s Spain and Portugal offices. He says prices have slipped 20% to 30% on average over the past several years in prime vacation areas in Portugal and Spain. In the past year alone Knight Frank’s Global House Price Index reports an 8.6% home price drop in Portugal and 7.3% in its larger neighbor.
The European Union’s debt crisis has roiled stock markets around the world, sending investors skittering toward U.S. Treasuries and other safe assets. The euro has weakened to about $1.25, the lowest conversion rate since the summer of 2010.
That makes it a great time for wealthy Americans to shop for retirement or vacation homes in Europe. Not unlike the U.S. housing market over the past five years, home prices have been sliding in many southern European nations thanks to high unemployment rates, high mortgage default rates, a glut of available inventory and a lack of buyers. Not surprisingly, home values have been hit the hardest in the so-called PIIGS countries — Portugal, Ireland, Italy, Greece and Spain — which have been struggling with high fiscal deficits.
Much more than beachside bungalows is on sale: Real estate brokers say many of their wealthy European clients are looking to liquidate their investments in European trophy homes and reinvest in stable markets like London and New York City.