The debt crisis has one silver lining: Falling prices for vacation homes in Greece, Spain, Portugal and even Italy…The general consensus among real-estate agents is that Portugal currently offers the best value of the four countries for second-home buyers. It offers fewer crowds than Spain and Italy; the climate is temperate year round (though the Atlantic Ocean tends to be chillier than the Mediterranean) and it hasn’t seen the rampant speculative development that occurred in Spain. Plus, prices for second homes have come down in the 15% to 50% range in the last year, says S. Rajan Sahay, founder of Atlas Property Portugal.

BULLETIN FROM EUROPE – That quintessential European villa—with a pool and maybe a lemon tree and a tennis court out back—is getting a lot cheaper.Spain, Portugal, Greece and, to a lesser extent, Italy, all immersed in the European debt crisis, are experiencing second-home property price declines. The countries’ housing markets have been battered by escalating debts, recent austerity measures and deep uncertainty in the financial markets. A glut of new homes built in boom times in many popular vacation areas is making matters worse, as rental demand falls and financing requirements become stiffer. As a result, asking prices for second homes have fallen 15% to 30% in recent months. In less fashionable areas, prices for some properties are as much as half off what they were two years ago.”Price expectations have finally adjusted to the new reality. People are finally accepting that the game has changed,” says Joachim Wrang Widen, director of Christie’s International Real Estate in Europe.
By Nancy Keates and Mary M. Lane, Sept. 16, 2011 WSJ

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WSJ Photo: Real estate agents say some of Italy’s best values are in Umbria, above, where you can get a home comparable to one in Tuscany for 30% less.