House prices are going down – Is it the best time to sell your home?
2018 was the best year for the real estate sector since the economic crisis in 2008. Most of all houses were sold in record time, creating a speedup in the market. Since 2014, the year where troika’s rescue program in Portugal ended, that there has been a new dynamic in the real estate sector. There was an increase in demand and supply decreased, causing an uptick in the value of homes, reaching 2018 with an increase of 40% in value.
It was anticipated a change for these events with the arrival of 2019. That change started with the increase of new constructions. As a result, the upper-middle-class and the upper-class are again investing in new constructions and abandoning investments on the second-hand houses.
The lack of supply of second-hand homes among the existing demand is the reason why there is pressure on the value. Another reason for the climbing value is due to the new rules set July 2018 by the Banco de Portugal. There were more limitations to the house loans and made low demand peak and the house value increase.
The speed of completion of sales slowed down. If the estimated time for selling a house in 2018 was 3 months, this year it could be up to 6 months, according to the collected data from Associação dos Profissinais e Empresas de Mediação Imobiliária (APEMIP). This association advises the owners to ponder the initial house value very carefully, otherwise the waiting time will double.
It is well known that to fix the initial value of a house is important to take into account some aspects about the property location, characteristics and the quality of it. So, to make a fast sale, you must analyse the fair value of your property. (to make a quick sale, follow these 6 fundamental tips, here)
The real estate agent has a leading role, in terms of making the market more balanced. The agent has the task of making the owners aware of the importance of the initial values of their properties being fair. Only then will they be able to do quick business.
This year, it is believed to be a decrease of 10% of the value launched at the beginning of the sales process. A good business is distinguished when you buy cheap and sell expensive, but at this moment, for that to happen, it is necessary to have time. Being able to wait is a virtue in today's real estate sector. Some experts still do not see these changes as an extreme decrease in property prices. There will only be a softening in prices.
Is this the perfect time to sell your house?
According to some industry experts, the market has not changed dramatically yet. There was only some moderation in the values of second-hand houses. If you want to start the process of selling your property, consider it well before doing so. Analyse all the pros and cons of the sale. Ask for help from qualified professionals and they will be able to predict whether your property will be sold quickly or not.
If your goal is to make a profit from property investment, please note that when you sell your property you will be taxed on capital gains. You will have to subtract 50% of the value for the IRS to the profit of the sale. There are ways to get around the taxation, for example, if you bought the house before 1989 you should be exempt. Or, if you decided to use the capital gain dividend payment on a new permanent house purchase on the first 36 months, you will also be exempt from this taxation. (find more about this subject, here)